G.R. No.

115307 July 8, 1997

MANUEL LAO, petitioner,
vs.
COURT OF APPEALS and BETTER HOMES REALTY & HOUSING CORPORATION, respondents.
PANGANIBAN, J.:
As a general rule, the main issue in an ejectment suit is possession de facto, not possession de jure. In the event the
issue of ownership is raised in the pleadings, such issue shall be taken up only for the limited purpose of determining
who between the contending parties has the better right to possession. However, where neither of the parties objects
to the allegation of the question of ownership which may be initially improvident or improper in an ejectment suit
and, instead, both present evidence thereon, argue the question in their various submissions and participate in all
aspects of the trial without objecting to the Metropolitan (or Municipal) Trial Court's jurisdiction to decide the question
of ownership, the Regional Trial Court in the exercise of its original jurisdiction as authorized by Section 11, Rule 40
of the Rules of Court may rule on the issue and the corollary question of whether the subject deed is one of sale or
of equitable mortgage.
These postulates are discussed by the Court as it resolves this petition under Rule 45 seeking a reversal of the
December 21, 1993 Decision 1 and April 28, 1994 Resolution 2 of the Court of Appeals in CA-G.R. SP No. 92-14293.
The Antecedent Facts
The facts of this case are narrated by Respondent Court of Appeals as follows: 3
On June 24, 1992, (herein Private Respondent Better Homes Realty and Housing Corporation) filed with
the Metropolitan Trial Court of Quezon City, a complaint for unlawful detainer, on the ground that (said
private respondent) is the owner of the premises situated at Unit I, No. 21 N. Domingo Street, Quezon
City, evidenced by Transfer Certificate of Title No. 22184 of the Registry of Deeds of Quezon City; that
(herein Petitioner Manuel Lao) occupied the property without rent, but on (private respondent's) pure
liberality with the understanding that he would vacate the property upon demand, but despite demand
to vacate made by letter received by (herein petitioner) on February 5, 1992, the (herein petitioner)
refused to vacate the premises.
In his answer to the complaint, (herein petitioner) claimed that he is the true owner of the house and
lot located at Unit I, No. 21 N. Domingo Street, Quezon City; that the (herein private respondent)
purchased the same from N. Domingo Realty and Development Corporation but the agreement was
actually a loan secured by mortgage; and that plaintiff's cause of action is for accion publiciana,
outside the jurisdiction of an inferior court.
On October 9, 1992, the Metropolitan Trial Court of Quezon City rendered judgment ordering the
(petitioner) to vacate the premises located at Unit I, No. 21 N. Domingo Street, Quezon City; to pay
(private respondent) the sum of P300.00 a day starting on January 31, 1992, as reasonable rent for the
use and occupation of the premises; to pay plaintiff P5,000.00, as attorney's fees, and costs.
On appeal to the Regional Trial Court of Quezon City, 4 on March 30, 1993, the latter court rendered a
decision reversing that of the Metropolitan Trial Court, and ordering the dismissal of the (private
respondent's) complaint for lack of merit, with costs taxed against (private respondent).
In its decision, the Regional Trial Court held that the subject property was acquired by (private
respondent) from N. Domingo Realty and Development Corporation, by a deed of sale, and (private
respondent) is now the registered owner under Transfer Certificate of Title No. 316634 of the Registry
of Deeds of Quezon City, but in truth the (petitioner) is the beneficial owner of the property because
the real transaction over the subject property was not a sale but a loan secured by a mortgage
thereon.
The dispositive portion of the Regional Trial Court's decision is quoted below: 5
WHEREFORE, judgment is hereby rendered reversing the appealed decision and ordering the dismissal
of plaintiffs complaint for lack of merit, with the costs taxed against it.
IT IS SO ORDERED.
On April 28, 1993, private respondent filed an appeal with the Court of Appeals which reversed the decision of the
Regional Trial Court. The Respondent Court ruled:
The Metropolitan Trial Court has no jurisdiction to resolve the issue of ownership in an action for
unlawful detainer (B.P. 129, Sec. 33 [2]; Cf. Alvir vs. Vera, 130 SCRA 357). The jurisdiction of a court is
determined by the nature of the action alleged in the complaint (Ching vs. Malaya, l53 SCRA 412). In
its complaint in the inferior court, the plaintiff alleged that it is the owner of the premises located at
Unit I, No. 21 N. Domingo Street, Quezon City, and that defendant's occupation is rent free and based
on plaintiffs pure liberality coupled with defendant's undertaking to vacate the premises upon demand,
but despite demands, defendant has refused to vacate. The foregoing allegations suffice to constitute
a cause of action for ejectment (Banco de Oro vs. Court of Appeals, 182 SCRA 464).
The Metropolitan Trial Court is not ousted of jurisdiction simply because the defendant raised the
question ownership (Bolus vs. Court of Appeals, 218 SCRA 798). The inferior court shall resolve the
issue of ownership only to determine who is entitled to the possession of the premises (B.P. 129, Sec.
33[2]; Bolus vs. Court of Appeals, supra).

Here, the Metropolitan Trial Court ruled that as owner, plaintiff (herein private respondent Better
Homes Realty and Housing Corporation) is entitled to the possession of the premises because the
defendant's stay is by mere tolerance of the plaintiff (herein private respondent).
On the other hand, the Regional Trial Court ruled that the subject property is owned by the defendant,
(herein petitioner Manuel Lao) and, consequently, dismissed the complaint for unlawful detainer. Thus,
the Regional Trial Court resolved the issue of ownership, as if the case were originally before it as an
action for recovery of possession, or accion publiciana, within its original jurisdiction. In an appeal from
a decision of the Municipal Trial Court, or Metropolitan Trial Court, in an unlawful detainer case, the
Regional Trial Court is simply to determine whether the inferior court correctly resolved the issue of
possession; it shall not delve into the issue of ownership (Manuel vs. Court of Appeals, 199 SCRA 603).
What the Regional Trial Court did was to rule that the real agreement between the plaintiff and the
previous owner of the property was not a sale, but an equitable mortgage. Defendant was only a
director of the seller corporation, and his claim of ownership could not be true. This question could not
be determined summarily. It was not properly in issue before the inferior court because, as aforesaid,
the only issue was possession de facto(Manlapaz vs. Court of Appeals, 191 SCRA 795), or who has a
better right to physical possession (Dalida vs. Court of Appeals, 117 SCRA 480). Consequently, the
Regional Trial Court erred in reversing the decision of the Metropolitan Trial Court.
WHEREFORE, the Court hereby REVERSES the decision of the Regional Trial Court. In lieu thereof, We
affirm the decision of the Metropolitan Trial Court of Quezon City sentencing the defendant and all
persons claiming right under him to vacate the premises situated at Unit I, No. 21 N. Domingo Street,
Quezon City, and to surrender possession to the plaintiff; to pay plaintiff the sum of P300.00, a day
starting on January 31, 1992, until defendant shall have vacated the premises; to pay plaintiff
P5,000.00 as attorneys fees, and costs.
SO ORDERED. 6
Manuel Lao's motion for reconsideration dated January 24, 1994 was denied by the Court of Appeals in its Resolution
promulgated on April 28, 1994. Hence, this petition for review before this Court. 7
The Issues
Petitioner Manuel Lao raises three issues:
3.1 Whether or not the lower court can decide on the issue of ownership in the present
ejectment case.
3.2 Whether or not private respondent had acquired ownership over the property in
question.
3.3 Whether or not petitioner should be ejected from the premises in question 8
The Court's Ruling
The petition for review is meritorious.
First Issue: Jurisdiction to Decide the Issue of Ownership
The Court of Appeals held that as a general rule, the issue in an ejectment suit is possession de facto, not
possession de jure, and that in the event the issue of ownership is raised as a defense, the issue is taken up for the
limited purpose of determining who between the contending parties has the better right to possession. Beyond this,
the MTC acts in excess of its jurisdiction. However, we hold that this is not a hard and fast rule that can be applied
automatically to all unlawful detainer cases.
Section 11, Rule 40 of the Rules of Court provides that "[a] case tried by an inferior court without jurisdiction over the
subject matter shall be dismissed on appeal by the Court of First Instance. But instead of dismissing the case, the
Court of First Instance, in the exercise of its original jurisdiction, may try the case on the merits if the parties therein
file their pleadings and go to the trial without any objection to such jurisdiction." After a thorough review of the records
of this case, the Court finds that the respondent appellate court failed to apply this Rule and erroneously reversed the
RTC Decision.
Respondent Court cites Alvir vs. Vera to support its Decision. On the contrary, we believe such case buttresses instead
the Regional Trial Court's decision. The cited case involves an unlawful detainer suit where the issue of possession was
inseparable from the issue of transfer of ownership, and the latter was determinable only after an examination of a
contract of sale involving the property in question. The Court ruled that where a "case was tried and heard by the
lower court in the exercise of its original jurisdiction by common assent of the parties by virtue of the issues raised . . .
and the proofs presented by them," any dismissal on the ground of lack of jurisdiction "would only lead to needless
delays and multiplicity of suits." The Court held:
In actions of forcible entry and detainer, the main issue is possession de facto, independently of any
claim of ownership or possession de jure that either party may set forth in his pleading. . . .
Defendant's claim of ownership of the property from which plaintiff seeks to eject him is not sufficient
to divest the inferior court of its jurisdiction over the action of forcible entry and detainer. However, if it
appears during the trial that the principal issue relates to the ownership of the property in dispute and
any question of possession which maybe involved necessarily depends upon the result of the inquiry
into the title, previous rulings of this Court are that the jurisdiction of the municipal or city court is lost
and the action should be dismissed.
We have at bar a case where, in effect, the question of physical possession could not properly be
determined without settling that of lawful or de jure possession and of ownership and hence, following
early doctrine, the jurisdiction of the municipal court over the ejectment case was lost and the action
should have been dismissed. As a consequence, respondent court would have no jurisdiction over the
case on appeal and it should have dismissed the case on appeal from the municipal trial court.

However, in line with Section 11, Rule 40 of the Revised Rules of Court, which
reads
Sec. 11. Lack of Jurisdiction. A case tried by an inferior court without jurisdiction
over the subject matter shall be dismissed on appeal by the Court of First Instance. But
instead of dismissing the case, the Court of First Instance in the exercise of its original
jurisdiction, may try the case on the merits if the parties therein file their pleadings
and go to trial without objection to such jurisdiction.
this Court held in Saliwan vs. Amores, 51 SCRA 329, 337, that dismissal "on the said ground of lack of
appellate jurisdiction on the part of the lower court flowing from the municipal court's loss of
jurisdiction would lead only to needless delay and multiplicity of suits in the attainment of the same
result and ignores, as above stated, that the case was tried and heard by the lower court in the
exercise of its original jurisdiction by common assent of the parties by virtue of the issues raised by the
parties and the proof presented by them thereon." 9
This pronouncement was reiterated by this Court through Mr. Justice Teodoro R. Padilla in Consignado vs. Court of
Appeals 10 as follows:
As the MTC of Laguna had no jurisdiction over the unlawful detainer case in view of the raised question
of title or ownership over the property in dispute, the RTC of Laguna also had no appellatejurisdiction
to decide the case on the merits. It should have dismissed the appeal. However, it
hadoriginal jurisdiction to pass upon the controversy. It is to be noted, in this connection, that in their
respective memoranda filed with the RTC of Laguna, the petitioners and private respondents did not
object to the said court exercising its original jurisdiction pursuant to the aforequoted provisions of
Section 11, Rule 40 of the Rules of Court.
xxx xxx xxx
Petitioners now contend, among others, that the Court of Appeals erred in resolving the question of
ownership as if actual title, not mere possession of subject premises, is involved in the instant case.
The petitioner's contention is untenable. Since the MTC and RTC of Laguna decided the question of
ownership over the property in dispute, on appeal the Court of Appeals had to review and resolve also
the issue of ownership. . . .
It is clear, therefore, that although an action for unlawful detainer "is inadequate for the ventilation of issues involving
title or ownership of controverted real property, [i]t is more in keeping with procedural due process that where issues
of title or ownership are raised in the summary proceedings for unlawful detainer, said proceeding should be dismissed
for lack of jurisdiction, unless, in the case of an appeal from the inferior court to the Court of First Instance, the parties
agree to the latter Court hearing the case in its original jurisdiction in accordance with Section 11, Rule 40 . . ." 11
In the case at bar, a determination of the issue of ownership is indispensable to resolving the rights of both parties
over the property in controversy, and is inseparable from a determination of who between them has the right to
possess the same. Indeed, the very complaint for unlawful detainer filed in the Metropolitan Trial Court of Quezon City
is anchored on the alleged ownership of private respondent over the subject premises. 12 The parties did not object to
the incongruity of a question of ownership being brought in an ejectment suit. Instead they both submitted evidence
on such question, and the Metropolitan Trial Court decided on the issue. These facts are evident in the Metropolitan
Trial Court's decision:
From the records of the case, the evidence presented and the various arguments advanced by the
parties, the Court finds that the property subject matter of this case is in the name of (herein private
respondent) Better Homes and Realty Housing Corporation; that the Deed of Absolute Sale which was
the basis for the issuance of said TCT No. 22184 is between N. Domingo Realty and Development
Corporation and Better Homes Realty and Housing Corporation which was signed by Artemio S. Lao
representing the seller N. Domingo and Realty Development Corporation; that a Board Resolution of N.
Domingo and Realty and Development Corporation (Exhibit "D" position paper) shows that the
Directors of the Board of the N. Domingo Realty and Development Corporation passed a resolution
selling apartment units I and F located at No. 21 N. Domingo St., Quezon City and designating the
(herein petitioner) with his brother Artemio S. Lao as signatories to the Deed of Sale. The claim
therefore of the (herein petitioner) that he owns the property is not true . . . 13
When the MTC decision was appealed to the Regional Trial Court, not one of the parties questioned the Metropolitan
Trial Court's jurisdiction to decide the issue of ownership. In fact, the records show that both petitioner and private
respondent discussed the issue in their respective pleadings before the Regional Trial Court. 14 They participated in all
aspects of the trial without objection to its jurisdiction to decide the issue of ownership. Consequently, the Regional
Trial Court aptly decided the issue based on the exercise of its original jurisdiction as authorized by Section 11, Rule 40
of the Rules of Court.
This Court further notes that in both of the contending parties' pleadings filed on appeal before the Court of Appeals,
the issue of ownership was likewise amply discussed. 15 The totality of evidence presented was sufficient to decide
categorically the issue of ownership.
These considerations, taken together with the fact that both the Metropolitan Trial Court and the Regional Trial Court
decided the issue of ownership, justify the review of the lower courts' findings of fact and decision on the issue of
ownership. This we now do, as we dispose of the second issue and decide the case with finality to spare the parties the

time, trouble and expense of undergoing the rigors of another suit where they will have to present the same evidence
all over again and where, in all probability, the same ultimate issue of ownership will be brought up on appeal.
Second Issue: Absolute Sale or Equitable Mortgage?
Private Respondent Better Homes Realty and Housing Corporation anchored its right in the ejectment suit on a
contract of sale in which petitioner (through their family corporation) transferred the title of the property in question.
Petitioner contends, however that their transaction was not an absolute sale, but an equitable mortgage.
In determining the nature of a contract, the Court looks at the intent of the parties and not at the nomenclature used
to describe it. Pivotal to deciding this issue is the true aim and purpose of the contracting parties as shown by the
terminology used in the covenant, as well as "by their conduct, words, actions and deeds prior to, during and
immediately after executing the agreement." 16 In this regard, parol evidence becomes admissible to prove the true
intent and agreement of the parties which the Court will enforce even if the title of the property in question has
already been registered and a new transfer certificate of title issued in the name of the transferee. In Macapinlac
vs. Gutierrez Repide, which involved an identical question, the Court succintly stated:
. . . This conclusion is fully supported by the decision in Cuyugan vs. Santos (34 Phil., 100), where this
court held that a conveyance in the form of a contract of sale with pacto de retro will be treated as a
mere mortgage, if really executed as security for a debt, and that this fact can be shown by oral
evidence apart from the instrument of conveyance, a doctrine which has been followed in the later
cases of Villa vs. Santiago (38 Phil., 157), and Cuyugan vs. Santos (39 Phil., 970).
xxx xxx xxx
In the first place, it must be borne in mind that the equitable doctrine which has been so fully stated
above, to the effect that any conveyance intended as security for a debt will be held in effect to be a
mortgage, whether so actually expressed in the instrument or not, operates regardless of the form of
the agreement chosen by the contracting parties as the repository of their will. Equity looks through
the form and considers the substance; and no kind of engagement can be adopted which will enable
the parties to escape from the equitable doctrine to which reference is made. In other words, a
conveyance of land, accompanied by registration in the name of the transferee and the issuance of a
new certificate, is no more secured from the operation of this equitable doctrine than the most
informal conveyance that could be devised. 17
The law enumerates when a contract may be presumed to be an equitable mortgage:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the performance of
any other obligation.
xxx xxx xxx 18
The foregoing presumption applies also to a "contract purporting to be an absolute sale." 19
Applying the preceding principles to the factual milieu of this case, we find the agreement between the private
respondent and N. Domingo Realty & Housing Corporation, as represented by petitioner, manifestly one of equitable
mortgage. First, possession of the property in the controversy remained with Petitioner Manuel Lao who was the
beneficial owner of the property, before, during and after the alleged sale. 20 It is settled that a "pacto de retro sale
should be treated as a mortgage where the (property) sold never left the possession of the vendors." 21 Second, the
option given to Manuel Lao to purchase the property in controversy had been extended twice 22 through documents
executed by Mr. Tan Bun Uy, President and Chairman of the Board of Better Homes Realty & Housing Corporation. The
wording of the first extension is a refreshing revelation that indeed the parties really intended to be bound by a loan
with mortgage, not by a pacto de retro. It reads, "On June 10, 88, this option is extended for another sixty days to
expired (sic) on Aug. 11, 1988. The purchase price is increased to P137,000.00. Since Mr. Lao borrow (sic) P20,000.00
from me." 23These extensions clearly represent the extension of time to pay the loan given to Manuel Lao upon his
failure to pay said loan on its maturity. Mr. Lao was even granted an additional loan of P20,000.00 as evidenced by the
above-quoted document. Third, unquestionably, Manuel Lao and his brother were in such "dire need of money" that
they mortgaged their townhouse units registered under the name of N. Domingo Realty Corporation, the family
corporation put up by their parents, to Private Respondent Better Homes Realty & Housing Corporation. In retrospect,
it is easy to blame Petitioner Manuel Lao for not demanding a reformation of the contract to reflect the true intent of
the parties. But this seeming inaction is sufficiently explained by the Lao brothers' desperate need for money,
compelling them to sign the document purporting to be a sale after they were told that the same was just for
"formality." 24 In fact, this Court, in various cases involving the same situation, had occasion to state:
. . . In Jayme, et al. v. Salvador, et al., this Court upheld a judgment of the Court of First Instance of
Iloilo which found the transaction between the parties to be a loan instead of a sale of real
propertynotwithstanding the terminology used in the document, after taking into account the
surrounding circumstances of the transaction. The Court through Justice Norberto Romualdez stated
that while it was true that plaintiffs were aware of the contents of the contracts, the preponderance of
the evidence showed however that they signed knowing that said contracts did not express their real
intention, and if they did so notwithstanding this, it was due to the urgent necessity of obtaining
fund."Necessitous men are not, truly speaking, free men; but to answer a present emergency, will
submit to any terms that the crafty may impose upon them." 25

Moreover, since the borrower's urgent need for money places the latter at a disadvantage vis-a-vis the lender who can
thus dictate the terms of their contract, the Court, in case of an ambiguity, deems the contract to be one which
involves the lesser transmission of rights and interest over the property in controversy. 26
As aptly found and concluded by the regional trial court:
The evidence of record indicates that while as of April 4, 1988 (the date of execution of the Deed of
Absolute Sale whereby the N. Domingo and Realty & Development Corporation purportedly sold the
townhouse and lot subject of this suit to [herein private respondent Better Homes Realty & Housing
Corporation] for P100,000.000) said N. Domingo Realty & Development Corporation (NDRDC, for short)
was the registered owner of the subject property under Transfer Certificate of Title (TCT) No. 316634 of
the Registry of Deeds for Quezon City, (herein petitioner Manuel Lao) in fact was and has been since
1975 the beneficial owner of the subject property and, thus, the same was assigned to him by the
NDRDC, the family corporation set up by his parents and of which (herein petitioner) and his siblings
are directors. That the parties' real transaction or contract over the subject property was not one of
sale but, rather, one of loan secured, by a mortgage thereon is unavoidably inferrable from the
following facts of record, to (herein petitioner's) possession of the subject property, which started in
1975 yet, continued and remained even after the alleged sale of April 4, 1988; (herein private
respondent) executed an option to purchase in favor (herein petitioner) as early as April 2, 1988 or two
days before (herein private respondent) supposedly acquired ownership of the property; the said
option was renewed several times and the price was increased with each renewal (thus, the original
period for the exercise of the option was up to June 11, 1988 and the price was P109,000.00; then, on
June 10, 1988, the option was extended for 60 days or until August 11, 1988 and the price was
increased to P137,000.00; and then on August 11, 1988, the option was again extended until
November 11,1988 and the price was increased to P158,840.00); and, the Deed of Absolute Sale of
April 4, 1988 was registered and the property transferred in the name of (private respondent) only on
May 10, 1989, per TCT No. 22184 of the Registry of Deeds for Quezon City (Arts. 1602, nos. 2, 3, & 6, &
1604, Civil Code). Indeed, if it were true, as it would have the Court believe, that (private respondent)
was so appreciative of (petitioner's) alleged facilitation of the subject property's sale to it, it is quite
strange why (private respondent) some two days before such supposed sale would have been minded
and inclined to execute an option to purchase allowing (petitioner) to acquire the property the very
same property it was still hoping to acquire at the time. Certainly, what is more likely and thus credible
is that, if (private respondent) was indeed thankful that it was able to purchase the property, it would
not given (petitioner) any option to purchase at all . . . 27
Based on the conduct of the petitioner and private respondent and even the terminology of the second option to
purchase, we rule that the intent and agreement between them was undoubtedly one of equitable mortgage and not
of sale.
Third Issue: Should Petitioner Be Ejected?
We answer in the negative. An action for unlawful detainer is grounded on Section 1, Rule 70 of the Rules of Court
which provides that:
. . . a landlord, vendor, vendee, or other person against whom the possession of any land or building is
unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any
contract, express or implied, or the legal representatives or assigns of any such landlord, vendor,
vendee, or other person, may, at any time within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper inferior court against the person or persons
unlawfully withholding or depriving of possession, or any person or persons claiming under them, for
the restitution of such possession, together with damages and costs . . . .
Based on the previous discussion, there was no sale of the disputed property. Hence, it still belongs to petitioner's
family corporation, N. Domingo Realty & Development Corporation. Private respondent, being a mere mortgagee, has
no right to eject petitioner. Private respondent, as a creditor and mortgagee, " . . . cannot appropriate the things given
by way of pledge
or mortgage, or dispose of them. Any stipulation to the contrary is null and void." 28
Other Matters
Private respondent in his memorandum also contends that (1) petitioner is not the real party in interest and (2) the
petition should be dismissed for "raising/stating facts not so found by the Court of Appeals." These deserve scant
consideration. Petitioner was impleaded as party defendant in the ejectment suit by private respondent itself. Thus,
private respondent cannot question his standing as a party. As such party, petitioner should be allowed to raise
defenses which negate private respondent's right to the property in question. The second point is really academic.
This ponencia relies on the factual narration of the Court of Appeals and not on the "facts" supplied by petitioner.
WHEREFORE, the petition is hereby GRANTED. The challenged Decision of the Court of Appeals is REVERSED and SET
ASIDE. The decision of the Regional Trial Court of Quezon City ordering the dismissal of the complaint for ejectment is
REINSTATED and AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 109410 August 28, 1996
CLARA M. BALATBAT, petitioner,
vs.
COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYAN, respondents.

TORRES, JR. , J.:p

Petitioner Clara M. Balatbat instituted this petition for review pursuant to Rule 45 of the Revised Rules of Court seeking
to set aside the decision dated August 12, 1992 of the respondent Court of Appeals in CA-GR. CV No. 29994 entitled
"Alexandra Balatbat and Clara Balatbat, plaintiffs-appellants versus Jose Repuyan and Aurora Repuyan, defendantsappellees", the dispositive portion of which reads: 1
WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of
P10,000.00 for attorney's fees and P5,000.00 as costs of litigation are deleted.
SO ORDERED.
The records show the following factual antecedents:
It appears that on June 15, 1977, Aurelio A. Roque filed a complaint for partition docketed as Civil Case No. 109032
against Corazon Roque, Alberto de los Santos, Feliciano Roque, Severa Roque and Osmundo Roque before the then
Court of First Instance of Manila, Branch IX. 2 Defendants therein were declared in default and plaintiff presented
evidence ex-parte. On March 29, 1979, the trial court rendered a decision in favor of plaintiff Aurelio A. Roque, the
pertinent portion of which reads: 3
From the evidence, it has been clearly established that the lot in question covered by Transfer
Certificate of Title No. 51330 was acquired by plaintiff Aurelio Rogue and Maria Mesina during their
conjugal union and the house constructed thereon was likewise built during their marital union. Out of
their union, plaintiff and Maria Mesina had four children, who are the defendants in this case. When
Maria Mesina died on August 28, 1966, the only conjugal properties left are the house and lot above
stated of which plaintiff herein, as the legal spouse, is entitled to one-half share pro-indiviso thereof.
With respect to the one-half share pro-indiviso now forming the estate of Maria Mesina, plaintiff and
the four children, the defendants here, are each entitled to one-fifth (1/5) share pro-indiviso. The
deceased wife left no debt.
Wherefore, judgment is hereby rendered ordering the partition of the properties, subject matter of this
case consisting of the house and lot, in the following manner:
1. Of the house and lot forming the conjugal properties, plaintiff is entitled to one-half share proindiviso thereof while the other half forms the estate of the deceased Maria Mesina;
2. Of the Estate of deceased Maria Mesina, the same is to be divided into five (5) shares and plaintiff
and his four children are entitled each to one-fifth share thereof pro-indiviso.
Plaintiff claim for moral, exemplary and actual damages and attorney's fees not having been
established to the satisfaction of the Court, the same is hereby denied.
Without pronouncement as to costs.
SO ORDERED
On June 2, 1979, the decision became final and executory. The corresponding entry of judgment was made on March
29, 1979. 4
On October 5, 1979, the Register of Deeds of Manila issued a Transfer Certificate of Title No. 135671 in the name of the
following persons in the following proportions: 5
Aurelio A. Roque 6/10 share
Severina M. Roque 1/10 share
Osmundo M. Roque 1/10 share
Feliciano M. Roque 1/10 share
Corazon M. Roque 1/10 share
On April 1, 1980, Aurelio A. Rogue sold his 6/10 share in T.C.T. No. 135671 to spouses Aurora Tuazon-Repuyan and Jose
Repuyan as evidenced by ."Deed of Absolute Sale." 6
On July 21, 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse claim
Certificate of Title No. 135671, 8 to wit:

on the Transfer

Entry No. 5627/T-135671 NOTICE OF ADVERSE CLAIM Filed by Aurora Tuazon Repuyan, married,
claiming among others that she bought 6/10 portion of the property herein described from Aurelio
Roque for the amount of P50,000.00 with a down payment of P5,000.00 and the balance of P45,000.00
to be paid after the partition and subdivision of the property herein described, other claims set forth in
Doc. No. 954, page 18, Book 94 of ________________ 64 _______ PEDRO DE CASTRO, Notary Public of
Manila.
Date of instrument July 21, 1980
Date of inscription July 21, 1980 at 3:35 p.m.

TERESITA H. NOBLEJAS
Acting Register of
Deeds
By:
RAMON D. MACARICAN
Acting Second Deputy
On August 20, 1980, Aurelio A. Roque filed a complaint for "Rescission of Contract" docketed as Civil Case No. 134131
against spouses Aurora Tuazon-Repuyan and Jose Repuyan before Branch IV of the then Court of First Instance of
Manila. The complaint is grounded on spouses Repuyan's failure to pay the balance of P45,000.00 of the purchase
price. 9 On September 5, 1980, spouses Repuyan filed their answer with counterclaim. 10
In the meantime, the trial court issued an order in Civil Case No. 109032 (Partition case) dated February 2, 1982, to
wit: 11
In view of all the foregoing and finding that the amount of P100,000.00 as purchase price for the sale
of the parcel of land covered by TCT No. 51330 of the Registry of Deeds of Manila consisting of 84
square meters situated in Callejon Sulu, District of Santa Cruz, Manila, to be reasonable and fair, and
considering the opportunities given defendants to sign the deed of absolute sale voluntarily, the Court
has no alternative but to order, as it hereby orders, the Deputy Clerk of this Court to sign the deed of
absolute sale for and in behalf of defendants pursuant to Sec. 10, Rule 39 of the Rules of Court, in
order to effect the partition of the property involved in this case.
SO ORDERED.
A deed of absolute sale was executed on February 4, 1982 between Aurelio S. Roque, Corazon Roque, Feliciano
Roque, Severa Roque and Osmundo Roque and Clara Balatbat, married to Alejandro Balatbat. 12On April 14,
1982, Clara Balatbat filed a motion for the issuance of a writ of possession which was granted by the trial court
on September 14, 1982 "subject, however, to valid rights and interest of third persons over the same portion
thereof, other than vendor or any other person or persons privy to or claiming any rights or interests under it."
The corresponding writ of possession was issued on September 20, 1982. 13
On May 20, 1982, petitioner Clara Balatbat filed a motion to intervene in Civil Case No. 134131 14 which was granted
as per court's resolution of October 21, 1982. 15 However, Clara Balatbat failed to file her complaint in
intervention.16 On April 15, 1986, the trial court rendered a decision dismissing the complaint, the pertinent portion of
which reads: 17
The rescission of contracts are provided for in the laws and nowhere in the provision of the Civil Code
under the title Rescissible Contracts does the circumstances in the case at bar appear to have
occurred, hence, the prayer for rescission is outside the ambit for which rescissible [sic] could be
granted.
The Intervenor Plaintiff, Clara Balatbat, although allowed to intervene, did not file her complaint in
intervention.
Consequently, the plaintiff having failed to prove with sufficient preponderance his action, the relief
prayed for had to be denied. The contract of sale denominated as "Deed of Absolute Sale" (Exh. 7 and
sub-markings) being valid and enforceable, the same pursuant to the provisions of Art. 1159 of the
Civil Code which says:
Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
has the effect of being the law between the parties and should be complied with. The obligation of the
plaintiff under the contract being to have the land covered by TCT No. 135671 partitioned and
subdivided, and title issued in the name of the defendant buyer (see page 2 par. C of Exh. 7-A) plaintiff
had to comply thereto to give effect to the contract.
WHEREFORE, judgment is rendered against the plaintiff, Aurelio A. Roque, and the plaintiff in
intervention, Clara Balatbat, and in favor of the defendants, dismissing the complaint for lack of merit,
and declaring the Deed of Absolute Sale dated April 1, 1980 as valid and enforceable and the plaintiff
is, as he is hereby ordered, to partition and subdivide the land covered by T.C.T. No. 135671, and to
aggregate therefrom a portion equivalent to 6/10 thereof, and cause the same to be titled in the name
of the defendants, and after which, the defendants, and after which, the defendants, and after which,
the defendants, and after which, the defendants to pay the plaintiff the sum of P45,000.00.
Considering further that the defendants suffered damages since they were forced to litigate
unnecessarily, by way of their counterclaim, plaintiff is hereby ordered to pay defendants the sum of
P15,000.00 as moral damages, attorney's fees in the amount of P5,000.00.
Costs against plaintiff.
SO ORDERED.

On March 3, 1987, petitioner Balatbat filed a notice of lis pendens in Civil Case No. 109032 before the Register of
Deeds of Manila. 18
On December 9, 1988, petitioner Clara Balatbat and her husband, Alejandro Balatbat filed the instant complaint for
delivery of the owners duplicate copy of T.C.T. No. 135671 docketed as Civil Case No. 88-47176 before Branch 24 of
the Regional Trial Court of Manila against private respondents Jose Repuyan and Aurora Repuyan. 19
On January 27, 1989, private respondents filed their answer with affirmative defenses and compulsory counterclaim.
On November 13, 1989, private respondents filed their memorandum
November 23, 1989. 22

21

20

while petitioners filed their memorandum on

On August 2, 1990, the Regional Trial Court of Manila, Branch 24, rendered a decision dismissing the complaint, the
dispositive portion of which reads : 23
Considering all the foregoing, this Court finds that the plaintiffs have not been able to establish their
cause of action against the defendants and have no right to the reliefs demanded in the complaint and
the complaint of the plaintiff against the defendants is hereby DISMISSED. On the counterclaim, the
plaintiff are ordered to pay defendants the amount of Ten Thousand Pesos by way of attorney's fees,
Five Thousand Pesos as costs of litigation and further to pay the costs of the suit.
SO ORDERED.
Dissatisfied, petitioner Balatbat filed an appeal before the respondent Court of Appeals which rendered the assailed
decision on August 12, 1992, to wit: 24
WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of
P10,000.00 for attorney's fees and P5,000.00 as costs of litigation are deleted.
SO ORDERED.
On March 22, 1993, the respondent Court of Appeals denied petitioner's motion for reconsideration. 25
Hence, this petition for review.
Petitioner raised the following issues for this Court's resolution:
I
WHETHER OR NOT THE ALLEGED SALE TO THE PRIVATE RESPONDENTS WAS MERELY EXECUTORY AND
NOT A CONSUMMATED TRANSACTION?
II
WHETHER OR NOT THERE WAS A DOUBLE SALE AS CONTEMPLATED UNDER ART. 1544 OF THE CIVIL
CODE?
III
WHETHER OR NOT PETITIONER WAS A BUYER IN GOOD FAITH AND FOR VALUE?
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED IN GIVING WEIGHT AND CONSIDERATION TO THE
EVIDENCE OF THE PRIVATE RESPONDENTS WHICH WERE NOT OFFERED?
Petitioner asseverates that the respondent Court of Appeals committed grave abuse of discretion tantamount to lack
or excess of jurisdiction in affirming the appealed judgment considering (1) that the alleged sale in favor of the private
respondents Repuyan was merely executory; (2) that there is no double sale; (3) that petitioner is a buyer in good faith
and for value; and (4) that private respondents did not offer their evidence during the trial.
Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private respondents Repuyan was
merely executory for the reason that there was no delivery of the subject property and that consideration/price was
not fully paid, we find the sale as consummated, hence, valid and enforceable. In a decision dated April 15, 1986 of the
Regional Trial Court of Manila Branch IV in Civil Case No. 134131, the Court dismissed vendor's Aurelio Roque
complaint for rescission of the deed of sale and declared that the Sale dated April 1, 1980, as valid and enforceable.
No appeal having been made, the decision became final and executory. It must be noted that herein petitioner
Balatbat filed a motion for intervention in that case but did not file her complaint in intervention. In that case wherein
Aurelio Roque sought to rescind the April 1, 1980 deed of sale in favor of the private respondents for non-payment of
the P45,000.00 balance, the trial court dismissed the complaint for rescission. Examining the terms and conditions of
the "Deed of Sale" dated April 1, 1980, the P45,000.00 balance is payable only "after the property covered by T.C.T.
No. 135671 has been partitioned and subdivided, and title issued in the name of the BUYER" hence, vendor Roque
cannot demand payment of the balance unless and until the property has been subdivided and titled in the name of
private respondents. Devoid of any stipulation that "ownership in the thing shall not pass to the purchaser until he has
fully paid the price" 26, ownership in thing shall pass from the vendor to the vendee upon actual or constructive
delivery of the thing sold even if the purchase price has not yet been fully paid. The failure of the buyer has not yet
been fully paid. The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the
seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil
Code. 27 Non-payment only creates a right to demand the fulfillment of the obligation or to rescind the contract.
With respect to the non-delivery of the possession of the subject property to the private respondent, suffice it to say
that ownership of the thing sold is acquired only from the time of delivery thereof, either actual or
constructive.28 Article 1498 of the Civil Code provides that when the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed
the contrary does not appear or cannot be inferred. 29 The execution of the public instrument, without actual delivery
of the thing, transfers the ownership from the vendor to the vendee, who may thereafter exercise the rights of an
owner over the same. 30 In the instant case, vendor Roque delivered the owner's certificate of title to herein private
respondent. It is not necessary that vendee be physically present at every square inch of the land bought by him,
possession of the public instrument of the land is sufficient to accord him the rights of ownership. Thus, delivery of a
parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the

sale in a public instrument (constructive). The provision of Article 1358 on the necessity of a public document is only
for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel
of land that this be embodied in a public instrument. 31
A contract of sale being consensual, it is perfected by the mere consent of the parties. 32 Delivery of the thing bought
or payment of the price is not necessary for the perfection of the contract; and failure of the vendee to pay the price
after the execution of the contract does not make the sale null and void for lack of consideration but results at most in
default on the part of the vendee, for which the vendor may exercise his legal remedies. 33
Article 1544 of the New Civil Code provides:
If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be movable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in
the possession and in the absence thereof, to the person who present the oldest title, provided there is
good faith.
Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be
transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default
thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents
the oldest title, provided there is good faith. 34
In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share in TCT No. 135671 to private respondents
Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children
(4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982.
Undoubtedly, this is a case of double sale contemplated under Article 1544 of the New Civil Code.
This is an instance of a double sale of an immovable property hence, the ownership shall vests in the person acquiring
it who in good faith first recorded it in the Registry of Property. Evidently, private respondents Repuyan's caused the
annotation of an adverse claim on the title of the subject property denominated as Entry No. 5627/T-135671 on July
21, 1980. 35 The annotation of the adverse claim on TCT No. 135671 in the Registry of Property is sufficient compliance
as mandated by law and serves notice to the whole world.
On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private respondents
who first caused the annotation of the adverse claim in good faith shall have a better right over herein petitioner.
Moreover, the physical possession of herein petitioners by virtue of a writ of possession issued by the trial court on
September 20, 1982 is "subject to the valid rights and interest of third persons over the same portion thereof, other
than vendor or any other person or persons privy to or claiming any rights to interest under it." 36 As between two
purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not
registered his title even if the latter is in actual possession of the immovable property. 37 Further, even in default of
the first registrant or first in possession, private respondents have presented the oldest title. 38 Thus, private
respondents who acquired the subject property in good faith and for valuable consideration established a superior
right as against the petitioner.
Evidently, petitioner cannot be considered as a buyer in good faith. In the complaint for rescission filed by vendor
Aurelio Roque on August 20, 1980, herein petitioner filed a motion for intervention on May 20, 1982 but did not file her
complaint in intervention, hence, the decision was rendered adversely against her. If petitioner did investigate before
buying the land on February 4, 1982, she should have known that there was a pending case and an annotation of
adverse claim was made in the title of the property before the Register of Deeds and she could have discovered that
the subject property was already sold to the private respondents. It is incumbent upon the vendee of the property to
ask for the delivery of the owner's duplicate copy of the title from the vendor. A purchaser of a valued piece of
property cannot just close his eyes to facts which should put a reasonable man upon his guard and then claim that he
acted in good faith and under the belief that there were no defect in the title of the vendor. 39 One who purchases real
estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good
faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint
him with the defects in the title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be
seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or
signs. 40
In fine, petitioner had nobody to blame but herself in dealing with the disputed property for failure to inquire or
discover a flaw in the title to the property, thus, it is axiomatic that culpa lata dolo aequiparatur gross negligence
is equivalent to intentional wrong.
IN VIEW OF THE FOREGOING PREMISES, this petition for review is hereby DISMISSED for lack of merit. No
pronouncement as to costs.
IT IS SO ORDERED.
G.R. No. 115508
February 15, 2000
ALEJANDRO AGASEN and FORTUNATA CALONGE-AGASEN, petitioners,
vs.
THE HON. COURT OF APPEALS and PETRA BILOG, assisted by her husband FELIPE BILOG, respondents.
YNARES-SANTIAGO, J.:

On April 7, 1980, private respondent Petra Bilog, assisted by her husband Felipe Bilog, filed a complaint for Recovery of
Possession and Ownership1 with the Regional Trial Court of Agoo, La Union, involving an Eight Thousand Four Hundred
Seventy Four (8,474) square meter parcel of land registered in her name under Transfer Certificate of Title No. T-16109
of the Registry of Deeds of La Union. She alleged that sometime in 1964 or 1965, petitioners took possession and
assumed ownership of the said property, appropriating the fruits therefrom. She alleged that despite demands on
them to vacate the land, petitioners refused to do so and even filed a case for Annulment of TCT and/or Reconveyance
with Damages before the same court, which case was, however, dismissed on February 12, 1980. Thus, in her
complaint, private respondent prayed that she be declared the true and absolute owner of the subject land and
petitioners be ordered to turn over possession thereof to her. Additionally, private respondent prayed for P300,000.00
as attorney's fees, P2,000.00 as expenses of litigation as well as P60,000.00 representing the value of the land's
produce from 1965 to the time of the filing of the case and P4,000.00 annually until the case is terminated.
In their Answer,2 petitioners Alejandro Agasen and Fortunata Calonge-Agasen asserted that the subject land used to
form part of Lot No. 2192, a forty two thousand three hundred seventy two (42,372) square meter parcel of land
owned in common by the five (5) Bilog siblings, private respondent Petra Bilog being one of them. Petitioners claimed
that they became the owners of the portion of the subject land which belonged to private respondent as her share
therein, by virtue of: (1) the sale in their favor of 1,785 square meters thereof by Leonora Calonge, sister of Fortunata
Calonge-Agasen, and (2) the sale in their favor by private respondent of the remaining 6,717.50 square meters on June
24, 1968, by virtue of a notarized Partition with Sale. Petitioners also affirmed that they had been in possession of the
subject land since the time of the above-mentioned sale transactions, with a house of strong materials built thereon.
By way of counterclaim, petitioners charged private respondent with having fraudulently caused title to the subject
land to be issued in her name, following the subdivision of the original land between her and her co-heirs/owners, in
violation of their (petitioners') rights over the subject land. Thus, petitioners prayed for the annulment of title in private
respondent's name and for the dismissal of the complaint, as well as for the award of P10,000.00 as exemplary
damages, P25,000.00 as moral damages, P5,000.00 as litigation expenses and P7,000.00 as attorney's fees and costs.
On November 19, 1984, the Regional Trial Court of Agoo, La Union, Branch 3, rendered judgment in favor of
petitioners, dismissing the complaint and declaring Transfer Certificate of Title No. 16109 in the name of private
respondent null and void.3
On appeal, the Court of Appeals reversed the decision of the lower court and private respondent was declared the true
and absolute owner of the subject land.4 Accordingly, petitioners were ordered to turn over the subject land to private
respondent.
With the denial of petitioners' Motion for Reconsideration on May 20, 1994, 5 the instant Petition was filed, anchored
upon the following grounds
I. THE DECISION (ANNEX A) ERRED IN DECLARING THE DEED OF PARTITION WITH SALE (EXH. 1) AND THE DEED OF
ABSOLUTE SALE (EXH. 2) NOT AUTHENTIC AND VALID;
II. THE DECISION ERRED IN HOLDING THAT DEFENDANTS FAILED TO SUBSTANTIATE THEIR CLAIM OF OWNERSHIP AND
IN GIVING MORE CREDENCE TO PLAINTIFF'S TESTIMONIAL EVIDENCE AND TAX DECLARATION NO. 21460 (EXH. B) AND
CERTIFICATION OF TAX PAYMENTS (EXH. C);
III. THE DECISION ERRED IN FINDING/HOLDING THAT THE NON-REGISTRATION OF THE DEED OF PARTITION WITH SALE
AND THE DEED OF ABSOLUTE SALE WITH THE REGISTER OF DEEDS MADE THE PURCHASES THEREUNDER "DENTED"
AND DID NOT AUTOMATICALLY VEST TITLE OR OWNERSHIP OVER THE SUBJECT PROPERTY TO THE BUYERS;
IV. THE DECISION ERRED IN HOLDING THAT THE DAILY NOTEBOOK (EXH. 3) CONTAINING THE MEMORANDUM OF
INSTALLMENT SALE BY LEONORA CALONGE TO DEFENDANT-APPELLEE FORTUNATA AGASEN (EXH. 3-a TO 3-c) OVER THE
PARCEL OF LAND DESCRIBED IN EXH. 2 WAS NOT A VALID OR CREDIBLE DOCUMENT OF TRANSFER;
V. THE DECISION GRAVELY ERRED IN HOLDING THAT TCT NO. 16109 (EXH. A) CANNOT BE COLLATERALLY ATTACKED ON
THE GROUND THAT IT IS BARRED BY THE RULE ON INDEFEASIBILITY OF A TORRENS TITLE AFTER THE LAPSE OF ONE
YEAR FROM THE DECREE OF REGISTRATION. 6
Although the instant case is a petition for review under Rule 45 which, as a general rule, is limited to reviewing errors
of law, findings of fact being conclusive as a matter of general principle, however, considering the conflict between the
factual findings of the trial court and the respondent Court of Appeals, there is a need to review the factual issues as
an exception to the general rule.7
As correctly stated by the lower court, the crucial question in the instant controversy is whether or not the two (2)
documents, relied upon by petitioners as basis for their claim of ownership, are valid. Overthrowing the lower court's
finding of validity, the Court of Appeals ruled that private respondent's testimonial and documentary evidence
"junked'' petitioners' documents (Exhibits "1" and "2").
We disagree.
To begin with, it is not denied that the two subject documents are notarized documents and, as such, are considered
public documents which enjoy the presumption of validity as to authenticity and due execution. 8 One of the
documents, the Deed of Absolute Sale, was identified by Assistant Provincial Fiscal Maximo Quero, the administering
officer who had notarized it. The legal presumption of validity of petitioners' duly notarized public documents has not
been overcome by preponderant evidence by private respondent, upon whom the burden of proof rests, having alleged
the contrary.9
The subject documents were also attached by petitioners to their Answer where they were alleged as part of the
counterclaim. As such, private respondent should have specifically denied under oath their genuineness and due
execution.10 After all, a counterclaim is considered a complaint, only this time, it is the original defendant who becomes
the plaintiff. It stands on the same footing and is to be tested by the same rules as if it were an independent
action.11 Having failed to specifically deny under oath the genuineness and due execution of the said documents,
private respondent is deemed to have admitted the same.
And while private respondent denied having signed any document selling the subject parcels of land, the trial court
found her signature on the subject documents to be genuine, after a comparison thereof with her own documentary
evidence on record (Exh. "B"). Indeed, it has been held that where a comparison is permissible, it may be made by the

court, with or without the aid of expert witnesses; 12 and evidence respecting handwriting may be given by a
comparison made by the court with writings admitted or treated as genuine by the party against whom the evidence is
offered.13 In the case at bar, the lower court compared private respondent's signatures on the subject documents with
that appearing on her own evidence (Exh. "B") and found the same identical.
The following circumstances all indicate the genuineness and due execution of the subject documents: (1) The subject
documents were duly notarized public documents; (2) The documents enjoy the legal presumption of validity; (3) Their
genuineness and due execution were not specifically denied under oath by private respondent; (4) Private
respondent's signature thereon were found genuine by the lower court upon a comparison of her signature thereon
with that in her own documentary evidence; (5) The actual identification and positive testimony of petitioner; and (6)
The testimony of the lawyer who had notarized one of the subject documents. Private respondent's bare denial of the
same cannot, by any measure, overcome the above-mentioned evidence and legal presumptions in petitioners' favor.
As for the sale in petitioners' favor by the original vendee thereof, Leonora Calonge, the Court of Appeals accepted
private respondent's charges that there was no valid document of transfer and that the notebook with memorandum
of sale and record of installment payments, relied upon by petitioners, was worse than the two subject documents.
Again, we disagree. The memorandum of sale appearing in Exhibit "3" is sufficient to prove the sale between petitioner
Fortunata Calonge Agasen and her late sister, the previous vendee of the land subject of the Deed of Absolute Sale
from private respondent. After all, contracts are obligatory in whatever form they may have been entered into provided
all essential requisites are present. 14 The provision of Article 1358 on the necessity of a public document is only for
convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of
land that this be embodied in a public instrument. 15
It was likewise error for the Court of Appeals to rule that the transactions were "dented by the failure to
register/annotate the same with the Register of Deeds" and that due to such failure, the documents "did not
automatically bind the subject property." First, one of the subject documents, the Deed of Absolute Sale, was in fact
registered. Second, as elucidated in Fule vs. Court of Appeals16
The Civil Code provides that contracts are perfected by mere consent. From this moment, the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law. A contract of sale is perfected at
the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the
price. Being consensual, a contract of sale has the force of law between the contracting parties and they are
expected to abide in good faith by their respective contractual commitments. Article 1358 of the Civil Code
which requires the embodiment of certain contracts in a public instrument, is only for convenience,
and registration of the instrument only adversely affects third parties. Formal requirements are, therefore, for
the benefit of third parties. Non-compliance therewith does not adversely affect the validity of the contract nor
the contractual rights and obligations of the parties thereunder.
In the light of the foregoing, we reverse the Court of Appeals's ruling that the failure of petitioners to register the
Partition with Sale was fatal.
The Court of Appeals also found petitioners' claim of ownership to be unsubstantiated, in contrast to that of private
respondent who presented tax declarations and certification of tax payments in her favor. As pointed out by
petitioners, however, the tax declarations in the name of private respondent for the year 1978 were issued only in
1977, and only after she had secured title to the property in her name. Such a belated declaration has been held to be
indicative of an absence of a real claim of ownership over the subject land prior to the declaration. 17On the other hand,
the real estate tax payments certified as paid by the Municipal Treasurer refers to the entire mother Lot No. 2192
before it was subdivided or partitioned into five (5) equal lots. Private respondent cannot be said to have paid taxes on
the subject property during the period when petitioners claimed that the property had already been sold to them.
We also note that, far from being unsubstantiated, petitioners' claim of ownership is backed by their long years of
possession of the subject parcels of land. There is no dispute that petitioners had occupied the subject land since the
sale in their favor, i.e., since 1964 in the case of the Deed of Absolute Sale and since 1968 in the case of the Partition
with Sale. They have also built a concrete house which has long been standing thereon.
Then, too, petitioners have adequately explained why they have not pursued their action for annulment of title against
private respondent, which the Court of Appeals viewed as having "further darkened the cloud of suspicion which
hovered over the questioned documents." Private respondent herself admits that petitioners were the first to assert
their right, by filing an action for annulment of title and/or for reconveyance with damages against private
respondent18 which complaint was, however, dismissed without prejudice. 19 On the other hand, the complaint of
private respondent was filed two months after the dismissal of their complaint, prompting them to merely interpose
their cause of action as a compulsory counterclaim in the lower court.
Finally, the Court of Appeals is likewise in error in holding that private respondent's title was "vested with the garment
of indefeasibility." The rule on indefeasibility of torrens title i.e., that torrens title can be attacked only for fraud,
within one year after the date of the issuance of the decree of registration applies only to original titles and not to
subsequent registration. An action for annulment of title and/or reconveyance which was previously filed by petitioners
and interposed in their counterclaim is an action open to them to attack private respondent's fraudulently acquired
title. Neither may the compulsory counterclaim of petitioners challenging the title of private respondent be brushed
aside as merely a collateral attack which would bar a ruling on the validity of the said title. 20
WHEREFORE, premises considered, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals
dated January 11, 1994 in CA-G.R. CV No. 10309 is SET ASIDE. The decision of the Regional Trial Court of Agoo, La
Union, Branch 32, dismissing Civil Case No. A-713, annulling Transfer Certificate of Title No. 16109 in the name of
private respondent and finding petitioners to be the lawful owners of the land covered by the same, is REINSTATED. No
pronouncement as to costs.1wphi1.nt

SO ORDERED.
G.R. No. 128579 April 29, 1999
The CITY OF CEBU, petitioner,
vs.
HEIRS OF CANDIDO RUBI, namely; MARIA J. RUBI, LINA RUBI BONOAN, HILDA RUBI BORRES, SYLVIA RUBI
MACACHOR, respondents.
GONZAGA-REYES, J
This is a petition for review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision of the
Court of Appeals 1 dated October 2, 1996 and the Order denying the Motion for Reconsideration 2 dated February 7,
1997 in CA-G.R. CV No. 40098 entitled Heirs of Candido Rubi, et. al. vs. Mayor Tomas R. Osmea, et. al.
The following antecedents stated in the decision of the Court of Appeals are undisputed:
Candido Rubi was a lessor (sic) from the Province of Cebu of a parcel of land identified as Lot 1141 of
the Banilad Estate containing an area of THIRTY THREE THOUSAND ONE HUNDRED EIGHTY EIGHT
(33,188) square meters, more or less, covered by Transfer Certificate of Title No. RT-5513 (Exh. A).
Paragraph 7 of the contract of lease provides that the lessee shall use the leased premises for
residential and agricultural purposes only and pursuant to this stipulation, Candido Rubi introduced
various improvements, among which is a residential building constructed in 1961 where he and his
family resided up to the time of his death in 1983.
In 1964, the Province of Cebu conveyed by way of donation to the City of Cebu two hundred and ten
(210) lots among which was Lot 1141 leased to Candido Rubi.
On March 4, 1965, the City Council of Cebu enacted Ordinance No. 522 (Exh. D) authorizing the City
Mayor to sell at public auction the 210 province-owned lots donated to defendant City of Cebu, among
which was Lot 1141.
Among the conditions set forth in Ordinance No. 522 (see par. C.) was that "if the lot is leased, the
lessee. . . shall be given the right to equal the highest bid on the date of the public bidding and if he so
equals the highest bid, he shall be awarded the sale.
On August 5, 1965 after the public bidding held on the same day, the bidding committee wrote
Candido Rubi advising him that the highest bid for Lot 1141 was submitted by Mr. Miguel Kho in the
amount P104,556.00 and that since he "stated" that he is the actual occupant and "going" to equal the
highest bid, he is advised to deposit with the City Treasurer 5% of P104,556.00 as earnest money and
an additional 15% as downpayment, after which the corresponding contract of sale will be entered into
between him and the City on August 9, 1965 (Exh. E.).
A day after the bidding, however, on August 6, 1965, a writ of preliminary injunction was issued in Civil
Case 238-BC filed by the province of Cebu from selling or otherwise disposing any of the 210 lots
donated by the province (Lot 1141 included).
On July 15, 1974, on the basis of a compromise agreement entered into in Civil Case No. 238-BC, Lot
No. 1141, among others, was adjudicated to defendant City of Cebu. By this time, Lot 1141 had
already been subdivided into Lots 1141-A, 1141-B, 1141-C and 1141-D, the last the lot subject of the
case, containing an area of 11,779 square meters where the house of Candido Rubi stands.
On September 19, 1974, the City Council of Cebu through Resolution No. 1747, authorized the City
Mayor to advertise the sale of Lots 1141-A and 1141-D (Exh. M-1).
At the public bidding held on October 1, 1974, there was no bidder for Lot 1141-D (Exh. M-1).
On January 30, 1976, Candido Rubi paid the amount of P4,500.00 under OR No. 9876421 as bidder's
cash bond for Lot No. 1141-D (Exh. N).
On February 3, 1976, Candido Rubi wrote the City Mayor of Cebu stating that he was one of the bidders
of Lots 1141-B, 1141-C and 1141-D in a bidding held January 30, 1976 at 10:00 a.m. at the Office of
the City Mayor and that as lessee of Lot No. 1141-D he is exercising his option of equaling the highest
bid price at P10.00 per square meter on the area that is on level ground and P8.00 per square meter
on the remaining area (Exh. O).
On March 2, 1976, the Committee on Award awarded "Lot 1141-D consisting of 11,934 square meters
at P10.00 per square meter" to Candido Rubi (Exh. P).
On March 9, 1976, Mayor Eulogio E. Borres furnished Candido Rubi a copy of the award and instructed
him to make the necessary payment for the land in order that the deed of sale may be executed in his
favor (Exh Q).
On April 7, 1976, the City Appraisal Committee, acting upon the 1st Indorsment dated April 6, 1976 of
the City Mayor indorsing Candido Rubi's letter dated February 3, 1976 (Exh. O) resolved to appraise a
portion of Lot No. 1141-D containing an area of 6,423 square meters at P10.00 per square meter and
the lower area containing an area of 5511 square meters, more or less, at P8.00 per square meter"
(Exh. T).

On April 23, 1976, Mayor Eulogio Borres again wrote Candido Rubi furnishing him a copy of Resolution
No. 7 of the City of Appraisal Committee and advising him to pay for the lot within 15 days from receipt
thereof (Exh. U).
On May 11, 1976, Candido Rubi wrote the City Mayor a letter reading:
By reason of circumstances beyond my control, I regret to inform you that I am unable
to complete the payment for Lot 1141-D as required by your office. For this reason I
most respectfully request that I be given an extension of the time within which to make
the said payment (Exh. V.).
In a 2nd Indorsement, dated December 23, 1980, the City Administrator referred to the City Attorney
"for comment and/or legal advice" all pertinent correspondence relative to the purchaser of Lot 1141-D
by Candido Rubi "considering that as per documents submitted, Mr. Rubi has not fully paid the total
purchase price of the hereinmentioned lot" (Exh. X).
In a 3rd Indorsement, dated January 6, 1981, the City Attorney replied to the City Administrator's 2nd
Indorsement stating that there appears to be no legal impediment to the request of Mr. Rubi, however,
per the charter of the City of Cebu, the City Mayor must be clothed with the corresponding authority
from the Sangguniang Panglunsod to sell Lot 1141-D to Candido Rubi at the price approved by the
Committee on Award per Resolution No. 7 of the City Appraisal Committee dated April 7, 1976 (Exh. Y).
Candido Rubi died on February 17, 1983, survived by his wife, Maria J. Rubi, and children Lina Rubi
Bonoan, Hilda Rubi Borres and Sylvia Machacor, plaintiffs in the case.
On May 17, 1989, plaintiffs filed the complaint at bench for specific performance (Record, p. 1). On the
same day, plaintiffs tendered the amount of P103,818.00 to the City Treasurer of Ceby City (Exh. 9)
and on June 28, 1989, consigned the amount with the Clerk of Court (Exhs. AA, AA-1 to AA-4).
On January 17, 1991, the Court a quo rendered the appealed decision dismissing the complaint ad
"declaring the defendant to have been released of its obligation to sell the property to the plaintiffs
under the terms and conditions of the award in 1976, stating:
The Court believes, and so holds, that the contract between the parties was a mere
contract to sell on the part of the defendant City of Cebu in which the full payment of
the price was a positive suspensive condition. Since the latter condition was not met,
the seller's obligation to deliver and transfer ownership of the property never vested.
The acceptance of a unilateral promise to sell must be plain, clear and unconditional.
Therefore, if there is a qualified acceptance, with terms different from the offer, there
is no acceptance, and there is no perfected sale. (Beaumonth vs. Prieto 41 Phil 670).
As there was no absolute acceptance on the part of Candid Rubi of the terms of the Award, nor of the
condition of the City acting through the City Mayor, to pay for the property within the period provided,
the transaction between the parties never ripened into a contract of sale. Consequently, the defendant
cannot be compelled to execute the necessary documents of conveyance to the plaintiffs. (Decision,
pp. 8-9; Rollo, pp. 60-61) 3
The Court of Appeals reversed the court a quo. It ruled that there was a perfected contract of sale but Candido Rubi
was not able to make payments thereunder due to circumstances beyond his control. Such failure of the buyer to pay
within a fixed period does not, by itself, bar the transfer to ownership or possession, much less dissolve the contract of
sale; in the sale of an immovable under Article 1592 of the Civil Code, the vendee is allowed to pay for the purchase
price so long as no demand has been made for rescission judicially or by a notarial act. The Court added that the fact
that the obligation was already substantially performed in good faith militates against the unilateral
extinguishment/rescission claimed by the City of Cebu. 4
In seeking the reversal of the Court of Appeals decision, the petitioner assigns the following errors:
I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN CONSIDERING AND
DECLARING THAT THERE WAS A PERFECTED CONTRACT OF SALE BY AND BETWEEN
CANDIDO RUBI AND THE CITY OF CEBU OVER LOT NO. 1141-D.
II. THAT EVEN CONCEDING GRATIA ARGUMENTI THAT A CONTRACT OF SALE WAS
PERFECTED BY MERE REASON OF THE AWARD OF SALE GRANTED IN FAVOR OF
CANDIDO RUBI, RESPONDENTS' LATE PREDECESSOR-IN-INTEREST, THE HONORABLE
COURT OF APPEALS NEVERTHELESS SERIOUSLY ERRED IN NOT CONSIDERING THAT
SAID CANDIDO RUBI, WAS GUILTY OF UNREASONABLE DELAY AND/OR LACHES IN
COMPLYING WITH THE CONDITIONS OF THE AWARD.
III. EVEN ASSUMING THAT THERE WAS A PERFECTED CONTRACT OF SALE, THE
HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THERE WAS NO
AUTOMATIC RECESSION OF THE CONTRACT, NOTWITHSTANDING RESPONDENTS'
FAILURE TO PAY THE PRICE AT THE TIME AGREED UPON.
IV. THAT IT IS PATENTLY ERRONEOUS FOR THE HONORABLE COURT OF APPEALS TO
ORDER HEREIN PETITIONER CITY OF CEBU TO EXECUTE THE NECESSARY DEED OF

CONVEYANCE WITHOUT ORDERING RESPONDENTS TO PAY LEGAL INTEREST ON THE

PURCHASE PRICE RECKONED FROM THE DATE OF AWARD IN 1976 UNTIL ITS
CONSIGNATION IN 1989.
The petitioner reiterates its position that the contract entered into by the petitioner and Candido Rubi was a contract
to sell and the failure of Rubi to make payment caused the automatic rescission of the obligation. Petitioner bases its
claim on two grounds:
1. that title to the remained with the petitioner, City of Cebu, before the necessary payment of the
purchase price of the lot in question was made by the respondents; and
2. that there was no written contract which makes the contract unenforceable under the statute of
frauds. 5
Petitioner also avers that even if the contract was indeed a contract of sale, the respondents were guilty of
laches in exercising and enforcing their rights. 6
On the other hand, respondents maintain that the contract entered into by the City and Rubi was a contract of sale.
They argue that a contract of sale can be perfected without a written document since a contract of sale is a
consensual contract, and since it is a contract of sale, respondents could still tender payment of the purchase price
because no demand to rescind the contract was made by the petitioner, citing Article 1592 of the Civil Code. They also
assert that there was no delay in the performance of the obligation by the respondents since the City impliedly
granted Rubi an extension of time to pay the purchase price. 7
We agree with the Court of Appeals that there was a perfected contract of sale between the parties. A contract of sale
is a consensual contract and is perfected at the moment there is a meeting of the minds upon the thing which is the
object of the contract and upon the price. From the moment, the parties may reciprocally demand performance subject
to the provisions of the law governing the form of contracts. 8 The elements of a valid contract of sale under Article
1458 of the Civil Code are (1) consent or meeting of the minds; (2) determine subject matter; and (3) price certain in
money or its equivalent. 9 All three elements are present in the transaction between the City of Cebu and Candido
Rubi. On February 3, 1976, Candido Rubi wrote the City Mayor that he was one of the bidders of Lot 1141-D in a
bidding held on January 30, 1976 and that he was exercising his option of equaling the highest bid price of P10.00 per
square meter for the area containing 6,423 square meter and P8.00 per square meter for the area containing 5,511
square meters. The acceptance by the city was conveyed in the letter of Mayor Eulogio Borres informing Rubi of the
resolution of the Appraisal Committee appraising Lot 1141-D at P10.00 for the area of 6,423 square meters and
advising him to pay for the lot within 15 days from receipt thereof. There was a perfected agreement between the City
of Cebu and Rubi whereby the City obligated itself to transfer the ownership of and deliver Lot 1141-D and Rubi to pay
the price. The effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon
notice of the award to the bidder. 10 An agreement presupposes a meeting of the minds and when that point is reached
in the negotiations between the parties intending to enter into a contract, the purported contract is deemed perfected
and none of them may thereafter disengage himself therefrom without being liable to the other in an action for specific
performance. 11
The deed of sale was never formalized, and there is no documents the terms of which may be interpreted to determine
its legal significance, particularly whether the parties have entered into a contract of sale or a contract to sell.
However, there is nothing in the exchange of correspondence between the parties namely:
1. Exhibit O the letter of Candido Rubi addressed to the Mayor where he notified the Mayor that he
was exercising his option of equaling the highest bid price over Lot No. 1141-D;
2. Exhibit P the award of the Committee on Awards awarding Lot 1141-D to Candido Rubi;
3. Exhibit Q the latter of Mayor Eulogio E. Borres to Rubi informing him to pay for Lot 1141-D;
4. Exhibit T the appraisal made by the City Appraisal Committee appraising the value of the lot to be
P10.00 per square meter for the area containing 6,423 square meters and P8.00 per square meter for
the area containing 5,511 square meters; and
5. Exhibit U the second letter of Mayor Borres again informing Rubi to pay for Lot 1141-D at the price
appraised by the City Appraisal Committee.
taken together with the documents of record, from which it can reasonably be deduced that the parties
intended to enter into a contract to sell, i.e., one whereby the prospective seller would explicitly reserve the
transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the contract to sell until full payment of the price, such payment
being a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but
simply an event which prevented the obligation from acquiring any obligatory force. 12 A contract to sell is
commonly entered into so as to protect the seller against a buyer who intends to buy the property in
installments by withholding ownership over the property until the buyer effects full payment therefor. 13 In this
case, the parties intended to enter into a contract of sale of Lot 1141-D for a cash price of P108,318.00 in one
payment. The advertisement for bids for Lot 1141-D expressly stated that the "sale shall be for cash" 14 and
Rubi's letter exercising the lessee's option to equal the equal the bid offered a straight bid of P10.00 per
square meter. 15Mayor Borres' letter of March 9, 1976 informing Rubi of the award asked Rubi to make the
necessary payment, stating that "This must be made before we have to execute the deed of sale in your favor
and the title to the lot." 16; and a subsequent letter dated April 23, 1976 requested Rubi "to pay the lot subject
of (your) bid, within fifteen days from receipt hereof." 17 The assumption of both parties that the offer and

acceptance was for a bid price in cash, not in staggered payments taken together with the fact that there was
no expressed or apparent intent to reserve ownership over the lot until full payment was made leads to no
other conclusion that Rubi and the City entered into a contract of sale.
As stated, no deed of sale was ever formalized but there was compliance with the requirements of the statute
of frauds. Under this law, 18 an agreement for the sale of real property or of an interest thereon shall be
unenforceable "unless the same or some note or memorandum thereof be in writing" and subscribed by the
party charged or his agent. We hold that the exchange of written correspondence between the parties, earlier
cited, constitute sufficient writing to evidence the agreement for purposes of complying with the statute of
frauds.
The next issue to be addressed is whether the failure of Rubi to pay the balance of the purchase price within
fifteen days as directed as directed by the City Mayor is fatal to his right to enforce the agreement and ask the
City of Cebu to execute the deed of sale in his favor.
The rescission of a sale immovable property is specially governed by Article 1592 of New Civil Code which
reads:
In the sale of immovable property, even though it may have been stipulated that upon failure to pay
the price at the time agreed upon the rescission of the contract shall of right take place, the vendeee
may pay, even after the expiration of the period, as long as no demand for rescission of the contract
has been made upon him either judicially or by a notarial act. After the demand, the court may not
grant him a new term. 19
It is not disputed that the City of Cebu did not give notice of rescission much less make a judicial or notarial
demand for rescission. The only subsequent action taken by petitioner was to send to the respondents a
"Formal Notice" dated March 4, 1989 ordering the latter to vacate the premises within fifteen days from receipt
of notice for the reason that the occupancy of lot 1141-D is presumed t be illegal as the lot is still registered in
the name of the City of Cebu. 20 This letter did not amount to a demand for rescission, as indeed there was no
reference to the sale much less a declaration that the sale was being rescinded or abrogated from the
beginning. 21 It was only when the City of Cebu filed its Answer on June 15, 1989 to the instant complaint for
specific performance that the city invoked "automatic rescission" and prayed for relief allowing it to rescind the
contract.
Given that there was no valid demand for rescission made by the City of Cebu, was Rubi justified in not making
full payment or tendering such payment of the price despite the long lapse of time since the award was a
made in his favor?
The Court notes that the vendee Rubi requested for an extension of time to pay as he was "prevented by
circumstances beyond his control" from making payment within fifteen days from notice, but this request was
not acted upon. Neither did Rubi follow up his request; he tendered payment only when he had filed this action
for specific performance, which suit was filed only after he received notice from the petitioner to vacate the
premises.
The petitioner admits in its pleadings 22 that an extension was impliedly given. However, we are not prepared
to rule that an implied extension of time to pay the purchase price was granted when the City of Cebu did not
act on Rubi's request for extension. The general rule is that an agreement to extend the time of payment, in
order to be valid, must be for a definite time, although it seems that no precise date be fixed, it being sufficient
that the time readily be determined. 23
We accordingly do not agree with the ruling of the Court of Appeals that the request for extension was granted
by the City of Cebu, as shown by the "complete silence" on the part of the City of Cebu on Rubi's request for
extension. The fact that the City did not act on the request for what amounts to an indefinite extension may be
construed just as logically as a denial thereof.
Is the contract of sale still subsisting after the lapse of several years, during which time neither party took any
action to enforce the contract. The City did not demand compliance or rescission and Rubi did not pursue
enforcement. Petitioner's Amended Answer claims that Rubi was guilty of unreasonable delay and/or laches, as
he brought his action for specific performance full payment of the price only in 1989. However, the City is no
less guilty of neglect and delay in not reiterating its demand for payment within a reasonable period from the
implied extension which it admittedly granted. Article 1592 allows the vendee to pay, even after the expiration
of the period agreed upon, as long as no demand for rescission has been made either judicially or by notarial
act, and it was incumbent upon the City to demand rescission. This conclusion also takes into account the fact
that Rubi had made a partial payment, consisting of the bidder's cash bond which the was accepted by the
City, and also the consideration that the City was mindful of the need to protect the rights of the actual lessees
to the lands formerly comprising the Friar Lands Estate having granted said lessees the right to match the offer
of the highest bidder in the public auction. Rubi has been a lessee/occupant of the property since 1957, has
introduced considerable improvements thereon consisting of a90-meter road, a residential house, water pipes,
and fruit trees 24 and has lived in the lot since 1961. 25 He was awarded Lot 1141-D not only once, but twice;
the first time was in 1965, (which did not materialize because of the filing of Civil Case No. 238-BC and the
injunction issued therein) and the second time in 1976. The respondents alleged in the Comment and this is
not controverted in petitioner's reply, that:
After Candido Rubi paid the City the sum of P4,500.00 representing partial payment of the bid price, he
was advised that the balance will be payable as soon as the Sangguniang Panglunsod approves a
resolution authorizing the City Mayor to sell Lot 1141-D at the price approved by the Committee on
Awards.

After an unreasonable lapse of time without the resolution having been approved, Candido Rubi
repeatedly inquired from the Sangguniang Panglunsod of Cebu City the reason for the delay.
The matter was endorsed to the Office of the City Attorney for legal opinion. On January 6, 1981, City
Attorney Vicente Varela, Jr. rendered an opinion to the effect that the agreement between the City of
Cebu and the late Candido Rubi was valid and binding notwithstanding the non-payment of the full
consideration of the sale (Exh. "Y").
In 1981, the Committee on Laws of the Sangguniang Panglunsod to which the manner was referred,
found that all the legal requirements relative to the purchase of Lot 1141-D (Exh. "BB") was complied
with the recommended the approval of a resolution authorizing the City Mayor to sign the deed of sale
in favor of Candido Rubi (Exhibit "Z"). 26
Verily, Rubi has not slept on his rights. A finding of laches, which is an equitable doctrine and the application of
which is controlled by equitable considerations, 27 again Rubi would not conform to law nor equity taking into
account the factual milieu of this case.
With respect to the petitioner's claim that the Court of Appeals erred in not ordering respondents to pay
interest due from the time of the award in 1976 until the time of the consignation of the balance of the
purchase price in 1989, respondents aver that:
petitioner did not raise the issue of interest in the Lower Court. Neither was the issue raised in their
"Appeal Brief" when the case was elevated to the Court of Appeals. It was only in the "Motion for
Reconsideration of the Decision of the Court of Appeals" that the issue of legal interest was raised for
the first time as an alternative remedy.
Neither did petitioner refute the above allegation in its Brief. Rather it invokes "fairness and justice" in seeking
payment of interest.
We find the plea unavailing. This Court has had occasion to rule that:
. . . the issue of interest was never raised before and cannot be raised for the first time on appeal.

28

. . . petitioner is deemed to have waived such right for his failure to raise its violation before the trail
court . . . In petitions under Rule 45, as distinguished from an ordinary appeal of criminal cases where
the whole case is opened for review, the appeals is generally limited to the errors assigned by the
petitioner. Issues not raised below cannot be pleaded for the first time on appeal. 29 (Emphasis
supplied)
Points of law, theories, issues and arguments not adequately brought to the attention of the lower
court need not be, and ordinarily will not be, considered by a reviewing court as they cannot be raised
for the first time on appeal. Basic considerations of due process impel this rule. 30
In view of the foregoing, the petition is denied due course, and the Decision of the Court of Appeals appealed
from is hereby AFFIRMED.1wphi1.nt
SO ORDERED.
G.R. No. 136427

December 17, 2002

SONIA F. LONDRES, ARMANDO V. FUENTES, CHI-CHITA FUENTES QUINTIA, ROBERTO V. FUENTES,

LEOPOLDO V. FUENTES, OSCAR V. FUENTES and MARILOU FUENTES ESPLANA Petitioners,
vs.
THE COURT OF APPEALS, THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, THE DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, ELENA ALOVERA SANTOS and CONSOLACION ALIVIO
ALOVERA, Respondents.
DECISION
CARPIO, J.:
Before us is a petition for review on certiorari1 of the March 17, 1997 Decision2 and the November 16, 1998
Resolution3 of the Court of Appeals in CA-G.R. CV No. 35540 entitled "Londres vs. Alovera". The assailed decision
affirmed the validity of the Absolute Sale dated April 24, 1959 vesting ownership of two parcels of land, Lots 1320 and
1333, to private respondents. The same decision also ordered public respondents to pay just compensation to private
respondents. The questioned resolution denied the motion for reconsideration of petitioners.
The Antecedent Facts
The present case stemmed from a battle of ownership over Lots 1320 and 1333 both located in Barrio Baybay, Roxas
City, Capiz. Paulina Arcenas ("Paulina" for brevity) originally owned these two parcels of land. After Paulinas death,
ownership of the lots passed to her daughter, Filomena VidaI ("Filomena" for brevity). The surviving children of
Filomena, namely, Sonia Fuentes Londres ("Sonia" for brevity), Armando V. Fuentes, Chi-Chita Fuentes Quintia, Roberto
V. Fuentes, Leopoldo V. Fuentes and Marilou Fuentes Esplana ("petitioners" for brevity) now claim ownership over Lots
1320 and 1333.

On the other hand, private respondents Consolacion Alivio Alovera ("Consolacion" for brevity) and Elena Alovera
Santos ("Elena" for brevity) anchor their right of ownership over Lots 1320 and 1333 on the Absolute Sale executed by
Filomena on April 24, 1959 ("Absolute Sale" for brevity). Filomena sold the two lots in favor of Consolacion and her
husband, Julian Alovera ("Julian" for brevity). Elena is the daughter of Consolacion and Julian (deceased).
On March 30, 1989, petitioners filed a complaint for the declaration of nullity of contract, damages and just
compensation. Petitioners sought to nullify the Absolute Sale conveying Lots 1320 and 1333 and to recover just
compensation from public respondents Department of Public Works and Highways ("DPWH" for brevity) and
Department of Transportation and Communication ("DOTC" for brevity). The case was raffled to the Regional Trial
Court, Branch 18, Roxas City, Capiz and docketed as Civil Case No. V-5668.
In their Complaint, petitioners claimed that as the surviving children of Filomena, they are the owners of Lots 1320 and
1333. Petitioners claimed that these two lots were never sold to Julian. Petitioners doubt the validity of the Absolute
Sale because it was tampered. The cadastral lot number of the second lot mentioned in the Absolute Sale was altered
to read Lot 1333 when it was originally written as Lot 2034. Petitioners pointed out that Lot 2034, situated in Barrio
Culasi, Roxas City, Capiz, was also owned by their grandmother, Paulina.
Petitioners alleged that it was only recently that they learned of the claim of private respondents when Consolacion
filed a petition for the judicial reconstitution of the original certificates of title of Lots 1320 and 1333 with the Capiz
Cadastre.4 Upon further inquiry, petitioners discovered that there exists a notarized Absolute Sale executed on April
24, 1959 registered only on September 22, 1982 in the Office of the Register of Deeds of Roxas City. The private
respondents copy of the Absolute Sale was tampered so that the second parcel of lot sold, Lot 2034 would read as Lot
1333. However, the Records Management and Archives Office kept an unaltered copy of the Absolute Sale. This other
copy shows that the objects of the sale were Lots 1320 and 2034.
In their Answer, private respondents maintained that they are the legal owners of Lots 1333 and 1320. Julian
purchased the lots from Filomena in good faith and for a valid consideration. Private respondents explained that Julian
was deaf and dumb and as such, was placed in a disadvantageous position compared to Filomena. Julian had to rely on
the representation of other persons in his business transactions. After the sale, Julian and Consolacion took possession
of the lots. Up to now, the spouses successors-in-interest are in possession of the lots in the concept owners. Private
respondents claimed that the alteration in the Absolute Sale was made by Filomena to make it conform to the
description of the lot in the Absolute Sale. Private respondents filed a counterclaim with damages.
The cross-claim of petitioners against public respondents was for the recovery of just compensation. Petitioners
claimed that during the lifetime of Paulina, public respondents took a 3,200-square meter portion of Lot 1320. The land
was used as part of the Arnaldo Boulevard in Roxas City without any payment of just compensation. In 1988, public
respondents also appropriated a 1,786-square meter portion of Lot 1333 as a vehicular parking area for the Roxas City
Airport. Sonia, one of the petitioners, executed a deed of absolute sale in favor of the Republic of the Philippines over
this portion of Lot 1333. According to petitioners, the vendee agreed to pay petitioners P214,320.00. Despite demands,
the vendee failed to pay the stipulated amount.
Public respondents in their Answer raised the following defenses: (1) they have no capacity to sue and be sued since
they have no corporate personality separate and distinct from the Government; (2) they cannot comply with their
undertaking since ownership over the portions of land is disputed by private respondents and until the issue of
ownership is settled, petitioners have no cause of action against public respondents; and (3) they are not proper
parties since they were not parties to the Absolute Sale sought to be nullified.
On May 28, 1991, the trial court issued its decision upholding the validity of the Absolute Sale. The dispositive portion
of the decision reads:
"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered:
1. Declaring the Absolute Sale executed by Filomina Vidal in favor of spouses Julian Alovera and Consolacion
Alivio on April 24, 1959 over subject Lots 1320 and 1333 (Exh. 4) valid and effective;
2. Declaring private defendants Consolacion Alivio Alovera and Elena Alovera Santos legal owners of subject
Lots 1320 and 1333;
3. Ordering public defendants Department of Public Works and Highways and Department of Transportation
and Communications to pay jointly and severally private defendants Consolacion Alivio Alovera and Elena
Alovera Santos just compensation of the 3,200-square meter portion taken by the government from subject Lot
1320 used as part of the Arnaldo Boulevard in Roxas City, and the 1,786-square meter portion also taken by
the government from subject Lot 1333 to be used as vehicle parking area of the Roxas City Airport; and
4. Ordering the dismissal of the complaint for lack of merit.
The cross-claim of private defendants against public defendants and private defendants counterclaim for damages
against the plaintiffs are likewise ordered dismissed. Costs against plaintiffs.
SO ORDERED."5
Petitioners and private respondents appealed. On March 17, 1997, the Court of Appeals promulgated its decision
affirming the decision of the trial court, thus:
"PREMISES CONSIDERED, the decision appealed from is hereby AFFIRMED.

SO ORDERED."6
On November 16, 1998, the Court of Appeals denied the respective motions for reconsideration of petitioners and
private respondents. The dispositive portion of the resolution reads:
"WHEREFORE, for lack of merit, the two motions for reconsideration are hereby DENIED.
SO ORDERED."7
The Ruling of the Trial Court
The trial court ruled that the Absolute Sale is valid based on the following facts:
"First, the description of subject Lot 1333, as appearing in the Absolute Sale dated April 24, 1959 executed by
Filomena Vidal in favor of spouses Julian Alovera and Consolacion Alivio (Exhs. 24 and 24-A), reads:
"2) A parcel of land (Lot No. 1333 of the Cadastral Survey of Capiz), with the improvements thereon, situated in the
Barrio of Baybay, Municipality of Capiz (now Roxas City). Bounded on the N. by the property of Nemesio Fuentes; on
the S. by the property of Rufo Arcenas; on the E. by the property of Mateo Arcenas; and on the W. by the property of
Valeriano Arcenas; containing an area of Eighteen Thousand Five Hundred Fifty Seven (18,557) square meters, more or
less. This parcel of land is all rice land and the boundaries thereon are visible consisting of stone monuments erected
thereon by the Bureau of Lands. It is declared under Tax Dec. No. 336 in the name of Filomena Vidal and assessed at
P930.00."
In the Absolute Sale executed by the same parties on the same date, the above-quoted description is the same except
the lot number, i.e., instead of the figure "1333" what is written therein is the figure "1320";
Second, subject Lot 1333 is situated in Barangay Baybay, Roxas City, whereas Lot 2034 which is the second lot subject
of the questioned absolute sale is situated in Barangay Culasi, Roxas City as evidenced by a certified true/xerox copy
of a sketch plan (Exh. 29) thereby indicating that said Lot 2034 in said Barangay Culasi (Exh. 29-A).
Third, Lot 2034 was previously owned by Jose Altavas (Exhs, 38 and 38-A) and later is owned in common by Libertad
Altavas Conlu, et al. (Exhs. 37 and 37-A) and there is no convincing evidence showing that this lot was ever owned, at
one time or another, by Paulina Arcenas or by Filomena Vidal or by plaintiffs, or their predecessors-in-interest;
Fourth, the two lots have been the subject of the transactions made by their former owner, Filomena Vidal, with some
persons, including spouses Julian Alovera and defendant Consolacion Alivio;
Fifth, the subject two lots have been continuously worked on since the early 1950s up to the present by Alejandro
Berlandino, and later by his son, Zosimo Berlandino, who were instituted therein as tenants by Julian Alovera and the
private defendants;
Sixth, these two lots have never been in the possession of the plaintiffs." 8
The trial court further noted that while petitioners and private respondents claimed that Lots 1320 and 1333 are titled,
both failed to account for the certificates of title. The trial court then concluded that there is merely a disputable
presumption that Lots 1320 and 1333 are titled and covered by certificates of title. The trial court further declared that
ownership over the two lots can still be acquired by ordinary prescription as in this case.
Private respondents and their predecessors-in-interest have been in continuous possession of Lots 1320 and 1333 for
nearly 30 years in good faith and with just title. The tax declarations issued in the name of Consolacion and the real
estate taxes paid by private respondents are strong evidence of ownership over Lots 1320 and 1333. Petitioners late
filing of the complaint, 30 years after the execution of the Absolute Sale or seven years after the registration of the
same, was considered by the trial court as laches.
The trial court gave more credence to the explanation of private respondents as to why the Absolute Sale was altered.
Consolacion noticed that the lot number of the second parcel of and sold to them by Filomena under the Absolute Sale
appeared to be "Lot 2034" and not "Lot 1333". Together with her husband, Julian, Consolacion went to Filomena. It was
Filomena who erased "Lot 2034" in the deed of sale and changed it to "Lot 1333". However, the copies of the
document in the custody of the Notary Public were not correspondingly corrected. Consequently, the copies kept by
the Records Management and Archives Office still referred to the second parcel of land sold as "Lot 2034".
Based on its factual findings, the trial court held that private respondents are the legal owners of Lots 1320 and 1333.
Private respondents are therefore entitled to just compensation for the portions of land taken by public respondents
from the two lots. However, the trial court ruled that private respondents could not recover attorneys fees since there
was no indication that the complaint was maliciously filed and intended to prejudice private respondents. The trial
court held that petitioners filed the action in good faith, believing that they were the real owners of the two lots.
The Ruling of the Court of Appeals
The Court of Appeals sustained the factual findings of the trial court, specifically the six points enumerated by the trial
court establishing Lots 1320 and 1333 as the objects of the Absolute Sale. Applying Article 1370 of the Civil Code, 9 the
Court of Appeals agreed with the trial court that there could be no room for interpretation as to the intention of the
parties on the objects of their contract.

The Court of Appeals upheld the ruling of the trial court that private respondents are not entitled to attorneys fees and
damages. The Court of Appeals opined that while there might have been incipient greed when the DPWH and DOTC
notified petitioners of the just compensation from the government, there was, however, no evidence that petitioners
filed the complaint in bad faith. There was nothing in the records to indicate that petitioners had actual or constructive
knowledge of the sale of the two lots to Julian. The document on file with the Records Management archives Office
alluded to a parcel of land denominated as Lot 2034 which is different from the property in question, Lot 1333. It was
only during the hearing of the case that it was made clear through the presentation of evidence that the lot referred to
in the Absolute Sale was Lot 1333, not Lot 2034, in addition to Lot 1320.
The Issues
Petitioners thus interposed this appeal, raising the following errors allegedly committed by the Court of Appeals:
"I.
THE COURT OF APPEALS ACTED WITH PATENT GRAVE ABUSE OF DISCRETION IN NOT REVERSING THE DECISION OF THE
TRIAL COURT, INSOFAR AS IT DECLARED VALID AND EFFECTIVE AN ABSOLUTE SALE", PURPORTEDLY EXECUTED BY
FILOMENA VIDAL, PREDECESSOR-IN-INTEREST OF PETITIONERS, IN FAVOR OF PRIVATE RESPONDENT CONSOLACION
ALIVIO AND HER SPOUSE, JULIAN ALOVERA, ON 24 APRIL 1959, OVER SUBJECT LOTS 1320 AND 1333.
II.
THE COURT OF APPEALS ACTED WITH PATENT GRAVE ABUSE OF DISCRETION IN NOT REVERSING THE DECISION OF THE
TRIAL COURT, INSOFAR AS IT DECLARED PRIVATE RESPONDENTS "LEGAL OWNERS OF SUBJECT LOTS 1320 AND 1333".
III.
THE COURT OF APPEALS ACTED WITH PATENT GRAVE ABUSE OF DISCRETION IN NOT REVERSING THE DECISION OF THE
TRIAL COURT, INSOFAR AS IT RULED THAT THE COMPENSATION FOR PORTIONS OF THE SUBJECT LOTS TAKEN BY THE
PUBLIC RESPONDENTS BE PAID TO THE PRIVATE RESPONDENTS AND NOT TO THE PETITIONERS.
IV.
THE COURT OF APPEALS ACTED WITH PATENT GRAVE ABUSE OF DISCRETION IN NOT REVERSING THE DECISION OF THE
TRIAL COURT, INSOFAR AS IT DISMISSED THE COMPLAINT IN CIVIL CASE NO. V-5668, RTC-ROXAS CITY, BRANCH 18." 10
The Courts Ruling
At the outset, it must be pointed out that this petition was seasonably filed, contrary to private respondents
contention that it was filed one day late. Petitioners had until January 17, 1999 to file this petition, which was a Sunday.
Since the last day for filing this petition fell on a Sunday, the time to file the petition would not have run until the next
working day.11 Petitioners filed the petition the next working day, January 18, 1999. Plainly then, the petition was filed
on time.
The petition, however, must fail on substantive grounds.
Petitioners implore the Court to declare the Absolute Sale void for failing to identify with certainty the two parcels of
land sold by Filomena, their mother, to private respondents. However, there is no valid ground for annulling the
Absolute Sale. The Absolute Sale is clear as to the first parcel of lot sold, which is Lot 1320. What raises some doubt is
the identity of the second parcel of lot sold, Is it Lot 2034 as indicated in the registered copy of the Absolute Sale? Or is
it Lot 1333 as made to appear in the copy of the Absolute Sale of private respondents?
In civil cases, the party with the burden of proof must establish his case by a preponderance of evidence. 12 By
"preponderance of evidence" is meant that the evidence as a whole adduced by one side is superior to that of the
other.13 Petitioners have the burden of proving that Lot 2034 was the real object of the Absolute Sale and the alteration
of the same instrument was unauthorized, warranting the absolute nullification of the sale. The trial court and the
Court of Appeals found the evidence of private respondents far more convincing in explaining the alteration in their
copy of the Absolute Sale. Both courts ruled that the correction was made by the parties to reflect the true object of
the sale, which was Lot 1333, not Lot 2034. In arriving at this conclusion, the two courts considered contemporaneous
and subsequent acts that indicate that what Filomena actually sold to private respondents were Lots 1320 and 1333.
These factual findings are binding upon the Court.14
As a rule, the appellate jurisdiction of the Court is limited only to question of law. 15 There is a question of law in a given
case when the doubt or difference arises as to what the law is given a certain set of facts, and there is a question of
fact when the doubt arises as to the truth or the falsity of the alleged facts. 16 No exceptional circumstances are present
in this case that would justify a re-evaluation of the factual findings of the trial court and the Court of Appeals, findings
that are duly supported by evidence of record.
Petitioners insist that there is serious doubt as to the identity of the objects of the Absolute Sale because the
descriptions of Lots 1320 and 1333 in the Absolute Sale do not correspond to the technical descriptions of the two lots
as found by the Bureau of Lands. Petitioners direct the Courts attention to these discrepancies:
TECHNICAL DESCRIPTION17
Lot 1320, Cad-I 33,
C-01 Capiz Cadastre, Ap-06-004023
A PARCEL OF LAND (Lot 1320, Cad-133, C-01,
Capiz Cadastre, Ap-06-004023, situated in the
barrio of Baybay, municipality of Capiz (Now
Roxas City), province of Capiz, island of Panay.
Bounded on the NE., along line 1-2 by Lot
1327; along line 2-3 by Lot 1328; along line 3-

DESCRIPTION PER ABSOLUTE SALE

1) A parcel of land (Lot No. 1320 of the
Cadastral Survey of Capiz), with the
improvements thereon, situated in the Barrio
of Baybay, Municipality of Capiz(now Roxas
City).
Bounded on the N. by the property of Matea
Arcenas; on the S. by the property of Roque
Severino; on the E. by the property of Matea
Arcenas; the W. by the property of Damaso

4 by Lot 1329; on the E., along line 4-5 by Lot

1326; on and the S., along line 5-6 by Lot
1325; along lines 6-7-8 by Lot 1321; on the
W., along line 8-9 by Lot 1295; on the NW.,
along lines 9-10-11 by Lot 1319; along line
11-12 by Lot 1318; along line 12-13 by Lot
1328; on the NE., along line 13-1 by Lot 1327,
all of Cad-133, Capiz Cadastre.

Arches;

Beginning at point marked "1" on plan being

N. 88-28 W., 651.78 meters from BBM No. 12,
Cad-133, Capiz Cadastre, thence

N. 85-01 E., 23.00 m. to point 2;

N. 83-40E., 19.03m. to point 4;

S. 84-22W., 61.31 m. to point 6;

S. 83-00 W., 145.33 m. to point 8;

N. 87-42 E., 26.49 m. to point 10;

N. 83-07 E., 31.86 m. to point 12;

N. 83-09 E., 76.04 m. to point 13;

S. 07-04E., 41. 88 m. to point 1.

Point of beginning;

containing an area of THIRTY THOUSAND

NINE HUNDRED FORTY FOUR (30,944)
SQUARE METERS, more or less. This parcel
of land is all rice land and the boundaries
thereon are visible consisting of stone
monuments erected thereon by the Bureau of
Lands. It is declared under Tax Dec. No. 4338
in the name of Filomena Vidal and assessed at
P1,550.00.

Containing an area of TWENTY FIVE

THOUSAND SEVEN HUNDRED SEVENTY
FIVE (25,775) SQUARE METERS, more or
less.

|
|
|

TECHNICAL DESCRIPTION18
Lot 1333, Cad-I 33, C-01
Capiz Cadastre, Ap-06-004022
A PARCEL OF LAND (Lot 1333, Cad-133, C-01,
Capiz Cadastre, Ap-06-004022, situated in the
barrio of Baybay, municipality of Capiz (now
Roxas City), province of Capiz, island of Panay.
Bounded on the SE., along line 1-2 by Lot
1330; on the W., & NW., along lines2-3-4-5 by
Lot 1329; on the NW., along line 5-6 by Lot
1334; along line 6-7 by Lot 1335; on the NE.,
& SE., along lines 7-8-1 by Lot 1332; all of
Cad-133, Capiz Cadastre.

DESCRIPTION PER ABSOLUTE SALE

2) A parcel of land (Lot No. 1333 of the
Cadastral Survey of Capiz), with the
Improvements thereon, situated in the Barrio
of Baybay, Municipality of Capiz (now Roxas
City).
Bounded on the N. by the property of
Nemesio Fuentes; on the S. by the property of
Rufo Arcenas; on the E. by the property of
Matea Arcenas; and on the W. by the property
of Valeriano Arcenas;
|
|

Beginning at a point marked "1" on plan being

N. 78-44., 326.64 meters from BBM No. 12,
Cad-133, Capiz Cadastre, thence

S. 81-42 W., 59.67 meters to point 2;

N. 07-36 W., 46.62 meters to point 3;

N. 82-34 E., 84.29 meters to point 4;

N. 09-13 W., 40-05 meters to point 5;

N. 82-57 E., 59.24 meters to point 6;

N. 81-48 E., 18.71 meters to point 7;

S. 03-30 E., 95.46 meters to point 8;

S. 82-57 W., 94.35 meters to point 1;

containing an area of EIGHTEEN

THOUSAND FIVE HUNDRED FIFTY
(10,860) SQUARE METERS, more orSEVEN
(18,557) SQUARE METERS, more or less.
This parcel of land is all rice land and the
boundaries thereon are visible consisting of
stone monuments erected thereon by the
Bureau of Lands. It is declared under Tax Dec.
No. 4336 in the name of Filomena Vidal and
assessed at P930.00.

Point of beginning.
Containing an area of TEN THOUSAND
EIGHT HUNDRED SIXTY less.

We are not persuaded. Petitioners rely on the technical descriptions of Lots 1320 and 1333 that were issued by the
Bureau of Lands on November 8, 1988. It must be pointed out that when private respondents and Filomena executed
the sale in 1959, they based the description of the two lots on the tax declarations of Filomena. Early tax declarations
are, more often than not, based on approximation or estimation rather than on computation. 19 This is understandably
so because of the absence then of technical knowledge in the accurate measurement of lands. 20 What really defines a
piece of land is not the area mentioned in its description, but the boundaries therein laid down, as enclosing the land
and indicating its limits.21 In this case, the boundaries of the two lots are sufficiently designated in the Absolute Sale,
leaving no room to doubt the identity of the objects of the sale.
Petitioners anchor their right of ownership over Lots 1320 and 1333 as the sole heirs of their mother, Filomena, who
previously owned the lots. However, Filomena had already ceded her right of ownership over Lots 1320 and 1333 to
private respondents when she executed the Absolute Sale. A sale of real property is a contract transferring dominion
and other real rights in the thing sold.22 Proof of the conveyance of ownership is the fact that from the time of the sale,
or after more than 30 years, private respondents have been in possession of Lots 1320 and 1333. Petitioners on the
other hand have never been in possession of the two lots.
Filomena died sometime in 198523 and petitioners instituted the complaint four years after Filomenas death. It is
unthinkable for Filomena to have allowed private respondents to enjoy ownership of Lots 1320 and 1333 if she never
really intended to sell the two lots to private respondents or if she had Lot 2034 in mind when she signed the Absolute
Sale. In the first place, Lot 2034 could not have been contemplated by the parties since this parcel of land was never
owned by Filomena, or by her mother, Paulina. Secondly, Lot 2034 does not fit the description of the second parcel of
lot mentioned in the Absolute Sale. The Absolute Sale describes the second lot as located in Barangay Baybay, Roxas
City. Lot 2034 is situated in Barangay Culasi, Roxas City.
In resolving the similar case of Atilano vs. Atilano,24 where there was also a mistake in the designation of the lot
number sold, the Court took into account facts and circumstances to uncover the true intentions of the parties. The
Court held that when one sells or buys real property, one sells or buys the property as he sees it, in its actual setting
and by its physical metes and bounds, and not by the mere lot number assigned to it in the certificate of title. As long
as the true intentions of the parties are evident, the mistake will not vitiate the consent of the parties, or affect the
validity and binding effect of the contract between them. In this case, the evidence shows that the designation of the
second parcel of land sold as Lot 2034 was merely an oversight or a typographical error. The intention of the parties to
the Absolute Sale became unmistakably clear when private respondents, as vendees, took possession of Lots 1320 and
1333 in the concept of owners without the objection of Filomena, the vendor.
Petitioners harp on the fact that the notarized and registered copy of the Absolute Sale should have, been
correspondingly corrected. Petitioners believe that the notarized and archived copy should prevail. We disagree. A
contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price.25 Being consensual, a contract of sale has the force of law between the contracting
parties and they are expected to abide in good faith with their respective contractual commitments. 26Article 1358 of
the Civil Code, which requires certain contracts to be embodied in a public instrument, is only for convenience, and
registration of the instrument is needed only to adversely affect third parties. 27 Formal requirements are, therefore, for
the purpose of binding or informing third parties. 28 Non-compliance with formal requirements does not adversely affect
the validity of the contract or the contractual rights and obligations of the parties. 29
Petitioners fault the trial court for declaring that Lots 1333 and 1320 can be acquired by prescription even though
these lots are already covered by certificates of title. The real issue in this case is the true intentions of the parties to
the Absolute Sale, not adverse possession. The decisions of the trial court and the Court of Appeals are clear on this
point. In fact, the Court of Appeals no longer dealt with the issue of acquisitive prescription since it was already
convinced that private respondents right over Lots 1333 and 1320 emanates from the Absolute Sale.
In a desperate bid to compel the Court to disregard the evidence of private respondents, petitioners question the
admissibility of the testimony of Consolacion on the ground that it violates the Dead Mans Statute. Petitioners contend
that Consolacions testimony as to how the alteration of the Absolute Sale took place should have been disregarded
since at the time that Consolacion testified, death had already sealed the lips of Filomena, precluding petitioners from
refuting Consolacions version.
The contention is without basis. The Dead Mans Statute then embodied in Section 20 (a) of Rule 130 of the 1988 Rules
of Court provides:

"SEC. 20. Disqualification by reason of interest or relationship. - The following persons cannot testify as to matters in
which they are interested, directly or indirectly, as herein enumerated:
(a) Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an executor or
administrator or other representative of a deceased person, or against a person of unsound mind, upon a claim or
demand against the estate of such deceased person or against such person of unsound mind, cannot testify as to any
matter of fact occurring before the death of such deceased person or before such person became of unsound mind;
xxx"
The foregoing prohibition applies to a case against the administrator or representative of an estate upon a claim
against the estate of the deceased person.30 The present case was not filed against the administrator of the estate, nor
was it filed upon claims against the estate since it was the heirs of Filomena who filed the complaint against private
respondents. Even assuming that Consolacions testimony was within the purview of the Dead Mans Statute, the fact
that the counsel of petitioners failed to timely object to the admissibility of Consolacions testimony is a waiver of the
prohibition.31 The waiver was made more evident when the counsel of petitioners cross-examined
Consolacion.32 Petitioners cannot now invoke the rule they knowingly waived.
From the time of the execution of the Absolute Sale on April 24, 1959, private respondents became the owners of Lots
1320 and 1333. The expropriation of any portion of the two lots from the time of the execution of the Absolute Sale
would necessarily entitle private respondents to the payment of just compensation. We cannot, however, agree with
the trial court and the Court of Appeals that public respondents could be ordered to pay private respondents just
compensation in the same suit. Public respondents were impleaded in this case when petitioners filed a cross-claim
against them for just compensation. The cross-claim should have been dismissed, as it does not comply with Section 7
of Rule 6 of the 1988 Rules of Court.1wphi1 The rule provides:
"SEC. 7. Cross-claim. A cross-claim is any claim by one party against a co-party arising out of the transaction or
occurrence that is the subject matter either of the original action or of a counterclaim therein. Such cross-claim may
include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a
claim asserted in the action against the cross-claimant."
Based on the foregoing rule, the cross-claim is proper only when:
"1. It arises out of the subject matter of the complaint.1wphi1
2. It is filed against a co-party.
3. The cross-claimant stands to be prejudiced by the filing of the action against him." 33
The three requisites are absent in this case. The cross-claim for just compensation is a new matter raising a new cause
of action that must be litigated in a separate action, not in the same action for the nullification of contract. The
purpose of a cross-claim is to avoid multiplicity of suits. 34 Multiplicity of suits should be avoided if the filing of a
separate and independent action to recover a claim would entail proving exactly the same claim in an existing
action.35 However, when the causes of action are distinct and separate from each other, as in this case, the
independent interest should be pursued in another proceeding. 36 Also, petitioners and public respondents are not coparties as they are not co-plaintiffs. Lastly, petitioners, as cross-claimants, would not be prejudiced by the filing of the
action since they are the plaintiffs in this case.
At any rate, private respondents are not left without any recourse. They can file their claim for compensation with the
proper government agency. Public respondent DPWH in its Comment points out that it is now public respondent DOTC
that has jurisdiction over the claim for compensation since the portions of the properties subject of this case were
taken to form part of the parking area of the Roxas Airport.37 In the same Comment, public respondent DPWH concedes
that they have never denied their obligation from the very beginning of this case. 38 Public respondents were only
constrained to withhold payment of just compensation as the reel owners of the lots In question were yet to be
declared by the Court. Since the issue of ownership has been settled, private respondents can now rightfully claim just
compensation for the portions of Lots 1320 and 1333 taken by the government after the execution of the Absolute
Sale.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 35540 is hereby AFFIRMED with the
MODIFICATION that the cross-claim against public respondents is DISMISSED. Costs against petitioners.
SO ORDERED.
G.R. No. L-11827

July 31, 1961

FERNANDO A. GAITE, plaintiff-appellee,

vs.
ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS,
FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY, defendants-appellants.
Alejo Mabanag for plaintiff-appellee.
Simplicio U. Tapia, Antonio Barredo and Pedro Guevarra for defendants-appellants.
REYES, J.B.L., J.:

This appeal comes to us directly from the Court of First Instance because the claims involved aggregate more than
P200,000.00.
Defendant-appellant Isabelo Fonacier was the owner and/or holder, either by himself or in a representative capacity, of
11 iron lode mineral claims, known as the Dawahan Group, situated in the municipality of Jose Panganiban, province of
Camarines Norte.
By a "Deed of Assignment" dated September 29, 1952(Exhibit "3"), Fonacier constituted and appointed plaintiffappellee Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or
juridical person for the exploration and development of the mining claims aforementioned on a royalty basis of not less
than P0.50 per ton of ore that might be extracted therefrom. On March 19, 1954, Gaite in turn executed a general
assignment (Record on Appeal, pp. 17-19) conveying the development and exploitation of said mining claims into the
Larap Iron Mines, a single proprietorship owned solely by and belonging to him, on the same royalty basis provided for
in Exhibit "3". Thereafter, Gaite embarked upon the development and exploitation of the mining claims in question,
opening and paving roads within and outside their boundaries, making other improvements and installing facilities
therein for use in the development of the mines, and in time extracted therefrom what he claim and estimated to be
approximately 24,000 metric tons of iron ore.
For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite to exploit and
develop the mining claims in question, and Gaite assented thereto subject to certain conditions. As a result, a
document entitled "Revocation of Power of Attorney and Contract" was executed on December 8, 1954 (Exhibit
"A"),wherein Gaite transferred to Fonacier, for the consideration of P20,000.00, plus 10% of the royalties that Fonacier
would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities in or
outside said claims, the right to use the business name "Larap Iron Mines" and its goodwill, and all the records and
documents relative to the mines. In the same document, Gaite transferred to Fonacier all his rights and interests over
the "24,000 tons of iron ore, more or less" that the former had already extracted from the mineral claims, in
consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the signing of the agreement, and
b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) will be paid from and out of the first letter of
credit covering the first shipment of iron ores and of the first amount derived from the local sale of iron ore
made by the Larap Mines & Smelting Co. Inc., its assigns, administrators, or successors in interests.
To secure the payment of the said balance of P65,000.00, Fonacier promised to execute in favor of Gaite a surety bond,
and pursuant to the promise, Fonacier delivered to Gaite a surety bond dated December 8, 1954 with himself
(Fonacier) as principal and the Larap Mines and Smelting Co. and its stockholders George Krakower, Segundina Vivas,
Pacifico Escandor, Francisco Dante, and Fernando Ty as sureties (Exhibit "A-1"). Gaite testified, however, that when this
bond was presented to him by Fonacier together with the "Revocation of Power of Attorney and Contract", Exhibit "A",
on December 8, 1954, he refused to sign said Exhibit "A" unless another bond under written by a bonding company
was put up by defendants to secure the payment of the P65,000.00 balance of their price of the iron ore in the
stockpiles in the mining claims. Hence, a second bond, also dated December 8, 1954 (Exhibit "B"),was executed by the
same parties to the first bond Exhibit "A-1", with the Far Eastern Surety and Insurance Co. as additional surety, but it
provided that the liability of the surety company would attach only when there had been an actual sale of iron ore by
the Larap Mines & Smelting Co. for an amount of not less then P65,000.00, and that, furthermore, the liability of said
surety company would automatically expire on December 8, 1955. Both bonds were attached to the "Revocation of
Power of Attorney and Contract", Exhibit "A", and made integral parts thereof.
On the same day that Fonacier revoked the power of attorney he gave to Gaite and the two executed and signed the
"Revocation of Power of Attorney and Contract", Exhibit "A", Fonacier entered into a "Contract of Mining Operation",
ceding, transferring, and conveying unto the Larap Mines and Smelting Co., Inc. the right to develop, exploit, and
explore the mining claims in question, together with the improvements therein and the use of the name "Larap Iron
Mines" and its good will, in consideration of certain royalties. Fonacier likewise transferred, in the same document, the
complete title to the approximately 24,000 tons of iron ore which he acquired from Gaite, to the Larap & Smelting Co.,
in consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite
(Record on Appeal, pp. 82-94).
Up to December 8, 1955, when the bond Exhibit "B" expired with respect to the Far Eastern Surety and Insurance
Company, no sale of the approximately 24,000 tons of iron ore had been made by the Larap Mines & Smelting Co.,
Inc., nor had the P65,000.00 balance of the price of said ore been paid to Gaite by Fonacier and his sureties payment
of said amount, on the theory that they had lost right to make use of the period given them when their bond, Exhibit
"B" automatically expired (Exhibits "C" to "C-24"). And when Fonacier and his sureties failed to pay as demanded by
Gaite, the latter filed the present complaint against them in the Court of First Instance of Manila (Civil Case No. 29310)
for the payment of the P65,000.00 balance of the price of the ore, consequential damages, and attorney's fees.
All the defendants except Francisco Dante set up the uniform defense that the obligation sued upon by Gaite was
subject to a condition that the amount of P65,000.00 would be payable out of the first letter of credit covering the first
shipment of iron ore and/or the first amount derived from the local sale of the iron ore by the Larap Mines & Smelting
Co., Inc.; that up to the time of the filing of the complaint, no sale of the iron ore had been made, hence the condition
had not yet been fulfilled; and that consequently, the obligation was not yet due and demandable. Defendant Fonacier
also contended that only 7,573 tons of the estimated 24,000 tons of iron ore sold to him by Gaite was actually
delivered, and counterclaimed for more than P200,000.00 damages.
At the trial of the case, the parties agreed to limit the presentation of evidence to two issues:
(1) Whether or not the obligation of Fonacier and his sureties to pay Gaite P65,000.00 become due and demandable
when the defendants failed to renew the surety bond underwritten by the Far Eastern Surety and Insurance Co., Inc.
(Exhibit "B"), which expired on December 8, 1955; and

(2) Whether the estimated 24,000 tons of iron ore sold by plaintiff Gaite to defendant Fonacier were actually in
existence in the mining claims when these parties executed the "Revocation of Power of Attorney and Contract",
Exhibit "A."
On the first question, the lower court held that the obligation of the defendants to pay plaintiff the P65,000.00 balance
of the price of the approximately 24,000 tons of iron ore was one with a term: i.e., that it would be paid upon the sale
of sufficient iron ore by defendants, such sale to be effected within one year or before December 8, 1955; that the
giving of security was a condition precedent to Gait's giving of credit to defendants; and that as the latter failed to put
up a good and sufficient security in lieu of the Far Eastern Surety bond (Exhibit "B") which expired on December 8,
1955, the obligation became due and demandable under Article 1198 of the New Civil Code.
As to the second question, the lower court found that plaintiff Gaite did have approximately 24,000 tons of iron ore at
the mining claims in question at the time of the execution of the contract Exhibit "A."
Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him, jointly and severally,
P65,000.00 with interest at 6% per annum from December 9, 1955 until payment, plus costs. From this judgment,
defendants jointly appealed to this Court.
During the pendency of this appeal, several incidental motions were presented for resolution: a motion to declare the
appellants Larap Mines & Smelting Co., Inc. and George Krakower in contempt, filed by appellant Fonacier, and two
motions to dismiss the appeal as having become academic and a motion for new trial and/or to take judicial notice of
certain documents, filed by appellee Gaite. The motion for contempt is unmeritorious because the main allegation
therein that the appellants Larap Mines & Smelting Co., Inc. and Krakower had sold the iron ore here in question, which
allegedly is "property in litigation", has not been substantiated; and even if true, does not make these appellants guilty
of contempt, because what is under litigation in this appeal is appellee Gaite's right to the payment of the balance of
the price of the ore, and not the iron ore itself. As for the several motions presented by appellee Gaite, it is
unnecessary to resolve these motions in view of the results that we have reached in this case, which we shall hereafter
discuss.
The main issues presented by appellants in this appeal are:
(1) that the lower court erred in holding that the obligation of appellant Fonacier to pay appellee Gaite the P65,000.00
(balance of the price of the iron ore in question)is one with a period or term and not one with a suspensive condition,
and that the term expired on December 8, 1955; and
(2) that the lower court erred in not holding that there were only 10,954.5 tons in the stockpiles of iron ore sold by
appellee Gaite to appellant Fonacier.
The first issue involves an interpretation of the following provision in the contract Exhibit "A":
7. That Fernando Gaite or Larap Iron Mines hereby transfers to Isabelo F. Fonacier all his rights and interests
over the 24,000 tons of iron ore, more or less, above-referred to together with all his rights and interests to
operate the mine in consideration of the sum of SEVENTY-FIVE THOUSAND PESOS (P75,000.00) which the latter
binds to pay as follows:
a. TEN THOUSAND PESOS (P10,000.00) will be paid upon the signing of this agreement.
b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00)will be paid from and out of the first letter of
credit covering the first shipment of iron ore made by the Larap Mines & Smelting Co., Inc., its assigns,
administrators, or successors in interest.
We find the court below to be legally correct in holding that the shipment or local sale of the iron ore is not a condition
precedent (or suspensive) to the payment of the balance of P65,000.00, but was only a suspensive period or term.
What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its
demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition
does not take place, the parties would stand as if the conditional obligation had never existed. That the parties to the
contract Exhibit "A" did not intend any such state of things to prevail is supported by several circumstances:
1) The words of the contract express no contingency in the buyer's obligation to pay: "The balance of Sixty-Five
Thousand Pesos (P65,000.00) will be paid out of the first letter of credit covering the first shipment of iron ores . . ."
etc. There is no uncertainty that the payment will have to be made sooner or later; what is undetermined is merely
the exact date at which it will be made. By the very terms of the contract, therefore, the existence of the obligation to
pay is recognized; only its maturity or demandability is deferred.
2) A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative
obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party
anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully
subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for
what he gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course of business
to do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to
evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that
Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to
guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the
company's stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds
indicates that they admitted the definite existence of their obligation to pay the balance of P65,000.00.

3) To subordinate the obligation to pay the remaining P65,000.00 to the sale or shipment of the ore as a condition
precedent, would be tantamount to leaving the payment at the discretion of the debtor, for the sale or shipment could
not be made unless the appellants took steps to sell the ore. Appellants would thus be able to postpone payment
indefinitely. The desireability of avoiding such a construction of the contract Exhibit "A" needs no stressing.
4) Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive
condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation would
incline the scales in favor of "the greater reciprocity of interests", since sale is essentially onerous. The Civil Code of
the Philippines, Article 1378, paragraph 1, in fine, provides:
If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests.
and there can be no question that greater reciprocity obtains if the buyer' obligation is deemed to be actually existing,
with only its maturity (due date) postponed or deferred, that if such obligation were viewed as non-existent or not
binding until the ore was sold.
The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on credit, and not an aleatory
contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or
shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was
intended merely to fix the future date of the payment.
This issue settled, the next point of inquiry is whether appellants, Fonacier and his sureties, still have the right to insist
that Gaite should wait for the sale or shipment of the ore before receiving payment; or, in other words, whether or not
they are entitled to take full advantage of the period granted them for making the payment.
We agree with the court below that the appellant have forfeited the right court below that the appellants have forfeited
the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00,
because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent
guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the
security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and
upon which he had insisted when he executed the deed of sale of the ore to Fonacier (Exhibit "A"). The case squarely
comes under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines:
"ART. 1198. The debtor shall lose every right to make use of the period:
(1) . . .
(2) When he does not furnish to the creditor the guaranties or securities which he has promised.
(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when
through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory.
Appellants' failure to renew or extend the surety company's bond upon its expiration plainly impaired the securities
given to the creditor (appellee Gaite), unless immediately renewed or replaced.
There is no merit in appellants' argument that Gaite's acceptance of the surety company's bond with full knowledge
that on its face it would automatically expire within one year was a waiver of its renewal after the expiration date. No
such waiver could have been intended, for Gaite stood to lose and had nothing to gain barely; and if there was any, it
could be rationally explained only if the appellants had agreed to sell the ore and pay Gaite before the surety
company's bond expired on December 8, 1955. But in the latter case the defendants-appellants' obligation to pay
became absolute after one year from the transfer of the ore to Fonacier by virtue of the deed Exhibit "A.".
All the alternatives, therefore, lead to the same result: that Gaite acted within his rights in demanding payment and
instituting this action one year from and after the contract (Exhibit "A") was executed, either because the appellant
debtors had impaired the securities originally given and thereby forfeited any further time within which to pay; or
because the term of payment was originally of no more than one year, and the balance of P65,000.00 became due and
payable thereafter.
Coming now to the second issue in this appeal, which is whether there were really 24,000 tons of iron ore in the
stockpiles sold by appellee Gaite to appellant Fonacier, and whether, if there had been a short-delivery as claimed by
appellants, they are entitled to the payment of damages, we must, at the outset, stress two things:first, that this is a
case of a sale of a specific mass of fungible goods for a single price or a lump sum, the quantity of "24,000 tons of iron
ore, more or less," stated in the contract Exhibit "A," being a mere estimate by the parties of the total tonnage weight
of the mass; and second, that the evidence shows that neither of the parties had actually measured of weighed the
mass, so that they both tried to arrive at the total quantity by making an estimate of the volume thereof in cubic
meters and then multiplying it by the estimated weight per ton of each cubic meter.
The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract
for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00
agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The
subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons
contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore
found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them (Mobile
Machinery & Supply Co., Inc. vs. York Oilfield Salvage Co., Inc. 171 So. 872, applying art. 2459 of the Louisiana Civil
Code). There is no charge in this case that Gaite did not deliver to appellants all the ore found in the stockpiles in the
mining claims in questions; Gaite had, therefore, complied with his promise to deliver, and appellants in turn are bound
to pay the lump price.

But assuming that plaintiff Gaite undertook to sell and appellants undertook to buy, not a definite mass, but
approximately 24,000 tons of ore, so that any substantial difference in this quantity delivered would entitle the buyers
to recover damages for the short-delivery, was there really a short-delivery in this case?
We think not. As already stated, neither of the parties had actually measured or weighed the whole mass of ore cubic
meter by cubic meter, or ton by ton. Both parties predicate their respective claims only upon an estimated number of
cubic meters of ore multiplied by the average tonnage factor per cubic meter.
Now, appellee Gaite asserts that there was a total of 7,375 cubic meters in the stockpiles of ore that he sold to
Fonacier, while appellants contend that by actual measurement, their witness Cirpriano Manlagit found the total
volume of ore in the stockpiles to be only 6.609 cubic meters. As to the average weight in tons per cubic meter, the
parties are again in disagreement, with appellants claiming the correct tonnage factor to be 2.18 tons to a cubic
meter, while appellee Gaite claims that the correct tonnage factor is about 3.7.
In the face of the conflict of evidence, we take as the most reliable estimate of the tonnage factor of iron ore in this
case to be that made by Leopoldo F. Abad, chief of the Mines and Metallurgical Division of the Bureau of Mines, a
government pensionado to the States and a mining engineering graduate of the Universities of Nevada and California,
with almost 22 years of experience in the Bureau of Mines. This witness placed the tonnage factor of every cubic
meter of iron ore at between 3 metric tons as minimum to 5 metric tons as maximum. This estimate, in turn, closely
corresponds to the average tonnage factor of 3.3 adopted in his corrected report (Exhibits "FF" and FF-1") by engineer
Nemesio Gamatero, who was sent by the Bureau of Mines to the mining claims involved at the request of appellant
Krakower, precisely to make an official estimate of the amount of iron ore in Gaite's stockpiles after the dispute arose.
Even granting, then, that the estimate of 6,609 cubic meters of ore in the stockpiles made by appellant's witness
Cipriano Manlagit is correct, if we multiply it by the average tonnage factor of 3.3 tons to a cubic meter, the product
is 21,809.7 tons, which is not very far from the estimate of 24,000 tons made by appellee Gaite, considering that
actual weighing of each unit of the mass was practically impossible, so that a reasonable percentage of error should be
allowed anyone making an estimate of the exact quantity in tons found in the mass. It must not be forgotten that the
contract Exhibit "A" expressly stated the amount to be 24,000 tons, more or less. (ch. Pine River Logging &
Improvement Co. vs U.S., 279, 46 L. Ed. 1164).
There was, consequently, no short-delivery in this case as would entitle appellants to the payment of damages, nor
could Gaite have been guilty of any fraud in making any misrepresentation to appellants as to the total quantity of ore
in the stockpiles of the mining claims in question, as charged by appellants, since Gaite's estimate appears to be
substantially correct.
WHEREFORE, finding no error in the decision appealed from, we hereby affirm the same, with costs against appellants.
G.R. No. 126376

November 20, 2003

SPOUSES BERNARDO BUENAVENTURA and CONSOLACION JOAQUIN, SPOUSES JUANITO EDRA and NORA
JOAQUIN, SPOUSES RUFINO VALDOZ and EMMA JOAQUIN, and NATIVIDAD JOAQUIN, petitioners,
vs.
COURT OF APPEALS, SPOUSES LEONARDO JOAQUIN and FELICIANA LANDRITO, SPOUSES FIDEL JOAQUIN
and CONCHITA BERNARDO, SPOUSES TOMAS JOAQUIN and SOLEDAD ALCORAN, SPOUSES ARTEMIO
JOAQUIN and SOCORRO ANGELES, SPOUSES ALEXANDER MENDOZA and CLARITA JOAQUIN, SPOUSES
TELESFORO CARREON and FELICITAS JOAQUIN, SPOUSES DANILO VALDOZ and FE JOAQUIN, and SPOUSES
GAVINO JOAQUIN and LEA ASIS, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari 1 to annul the Decision2 dated 26 June 1996 of the Court of Appeals in CA-G.R.
CV No. 41996. The Court of Appeals affirmed the Decision 3 dated 18 February 1993 rendered by Branch 65 of the
Regional Trial Court of Makati ("trial court") in Civil Case No. 89-5174. The trial court dismissed the case after it found
that the parties executed the Deeds of Sale for valid consideration and that the plaintiffs did not have a cause of action
against the defendants.
The Facts
The Court of Appeals summarized the facts of the case as follows:
Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and
Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. The
married Joaquin children are joined in this action by their respective spouses.
Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents
Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children and the corresponding certificates of
title issued in their names, to wit:
1. Deed of Absolute Sale covering Lot 168-C-7 of subdivision plan (LRC) Psd-256395 executed on 11 July 1978,
in favor of defendant Felicitas Joaquin, for a consideration of P6,000.00 (Exh. "C"), pursuant to which TCT No.
[36113/T-172] was issued in her name (Exh. "C-1");

2. Deed of Absolute Sale covering Lot 168-I-3 of subdivision plan (LRC) Psd-256394 executed on 7 June 1979, in
favor of defendant Clarita Joaquin, for a consideration of P1[2],000.00 (Exh. "D"), pursuant to which TCT No. S109772 was issued in her name (Exh. "D-1");
3 Deed of Absolute Sale covering Lot 168-I-1 of subdivision plan (LRC) Psd-256394 executed on 12 May 1988,
in favor of defendant spouses Fidel Joaquin and Conchita Bernardo, for a consideration of P54,[3]00.00 (Exh.
"E"), pursuant to which TCT No. 155329 was issued to them (Exh. "E-1");
4. Deed of Absolute Sale covering Lot 168-I-2 of subdivision plan (LRC) Psd-256394 executed on 12 May 1988,
in favor of defendant spouses Artemio Joaquin and Socorro Angeles, for a consideration ofP[54,3]00.00 (Exh.
"F"), pursuant to which TCT No. 155330 was issued to them (Exh. "F-1"); and
5. Absolute Sale of Real Property covering Lot 168-C-4 of subdivision plan (LRC) Psd-256395 executed on 9
September 1988, in favor of Tomas Joaquin, for a consideration of P20,000.00 (Exh. "G"), pursuant to which
TCT No. 157203 was issued in her name (Exh. "G-1").
6. Deed of Absolute Sale covering Lot 168-C-1 of subdivision plan (LRC) Psd-256395 executed on 7 October
1988, in favor of Gavino Joaquin, for a consideration of P25,000.00 (Exh. "K"), pursuant to which TCT No.
157779 was issued in his name (Exh. "K-1").]
In seeking the declaration of nullity of the aforesaid deeds of sale and certificates of title, plaintiffs, in their complaint,
aver:
- XXThe deeds of sale, Annexes "C," "D," "E," "F," and "G," [and "K"] are simulated as they are, are NULL AND VOIDAB
INITIO because
a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis;
b) Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the
properties are more than three-fold times more valuable than the measly sums appearing therein;
c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees);
and
d) Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to
unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime.
- XXI Necessarily, and as an inevitable consequence, Transfer Certificates of Title Nos. 36113/T-172, S-109772, 155329,
155330, 157203 [and 157779] issued by the Registrar of Deeds over the properties in litis xxx are NULL AND VOID AB
INITIO.
Defendants, on the other hand aver (1) that plaintiffs do not have a cause of action against them as well as the
requisite standing and interest to assail their titles over the properties in litis; (2) that the sales were with sufficient
considerations and made by defendants parents voluntarily, in good faith, and with full knowledge of the
consequences of their deeds of sale; and (3) that the certificates of title were issued with sufficient factual and legal
basis.4 (Emphasis in the original)
The Ruling of the Trial Court
Before the trial, the trial court ordered the dismissal of the case against defendant spouses Gavino Joaquin and Lea
Asis.5 Instead of filing an Answer with their co-defendants, Gavino Joaquin and Lea Asis filed a Motion to Dismiss. 6 In
granting the dismissal to Gavino Joaquin and Lea Asis, the trial court noted that "compulsory heirs have the right to a
legitime but such right is contingent since said right commences only from the moment of death of the decedent
pursuant to Article 777 of the Civil Code of the Philippines." 7
After trial, the trial court ruled in favor of the defendants and dismissed the complaint. The trial court stated:
In the first place, the testimony of the defendants, particularly that of the xxx father will show that the Deeds of Sale
were all executed for valuable consideration. This assertion must prevail over the negative allegation of plaintiffs.
And then there is the argument that plaintiffs do not have a valid cause of action against defendants since there can
be no legitime to speak of prior to the death of their parents. The court finds this contention tenable. In determining
the legitime, the value of the property left at the death of the testator shall be considered (Art. 908 of the New Civil
Code). Hence, the legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs
therefore cannot claim an impairment of their legitime while their parents live.
All the foregoing considered, this case is DISMISSED.
In order to preserve whatever is left of the ties that should bind families together, the counterclaim is likewise
DISMISSED.
No costs.
SO ORDERED.8

The Ruling of the Court of Appeals

The Court of Appeals affirmed the decision of the trial court.1wphi1 The appellate court ruled:
To the mind of the Court, appellants are skirting the real and decisive issue in this case, which is, whether xxx they
have a cause of action against appellees.
Upon this point, there is no question that plaintiffs-appellants, like their defendant brothers and sisters, are compulsory
heirs of defendant spouses, Leonardo Joaquin and Feliciana Landrito, who are their parents. However, their right to the
properties of their defendant parents, as compulsory heirs, is merely inchoate and vests only upon the latters death.
While still alive, defendant parents are free to dispose of their properties, provided that such dispositions are not made
in fraud of creditors.
Plaintiffs-appellants are definitely not parties to the deeds of sale in question. Neither do they claim to be creditors of
their defendant parents. Consequently, they cannot be considered as real parties in interest to assail the validity of
said deeds either for gross inadequacy or lack of consideration or for failure to express the true intent of the parties. In
point is the ruling of the Supreme Court in Velarde, et al. vs. Paez, et al., 101 SCRA 376, thus:
The plaintiffs are not parties to the alleged deed of sale and are not principally or subsidiarily bound thereby; hence,
they have no legal capacity to challenge their validity.
Plaintiffs-appellants anchor their action on the supposed impairment of their legitime by the dispositions made by their
defendant parents in favor of their defendant brothers and sisters. But, as correctly held by the court a quo, "the
legitime of a compulsory heir is computed as of the time of the death of the decedent. Plaintiffs therefore cannot claim
an impairment of their legitime while their parents live."
With this posture taken by the Court, consideration of the errors assigned by plaintiffs-appellants is inconsequential.
WHEREFORE, the decision appealed from is hereby AFFIRMED, with costs against plaintiffs-appellants.
SO ORDERED.9
Hence, the instant petition.
Issues
Petitioners assign the following as errors of the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE IN QUESTION HAD NO VALID
CONSIDERATION.
2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT EVEN ASSUMING THAT THERE WAS A
CONSIDERATION, THE SAME IS GROSSLY INADEQUATE.
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE DEEDS OF SALE DO NOT EXPRESS THE TRUE
INTENT OF THE PARTIES.
4. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE CONVEYANCE WAS PART AND PARCEL OF A
CONSPIRACY AIMED AT UNJUSTLY DEPRIVING THE REST OF THE CHILDREN OF THE SPOUSES LEONARDO
JOAQUIN AND FELICIANA LANDRITO OF THEIR INTEREST OVER THE SUBJECT PROPERTIES.
5. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONERS HAVE A GOOD, SUFFICIENT AND VALID
CAUSE OF ACTION AGAINST THE PRIVATE RESPONDENTS. 10
The Ruling of the Court
We find the petition without merit.
We will discuss petitioners legal interest over the properties subject of the Deeds of Sale before discussing the issues
on the purported lack of consideration and gross inadequacy of the prices of the Deeds of Sale.
Whether Petitioners have a legal interest over the properties subject of the Deeds of Sale
Petitioners Complaint betrays their motive for filing this case. In their Complaint, petitioners asserted that the
"purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest
of the compulsory heirs (plaintiffs herein) of their legitime." Petitioners strategy was to have the Deeds of Sale
declared void so that ownership of the lots would eventually revert to their respondent parents. If their parents die still
owning the lots, petitioners and their respondent siblings will then co-own their parents estate by hereditary
succession.11
It is evident from the records that petitioners are interested in the properties subject of the Deeds of Sale, but they
have failed to show any legal right to the properties. The trial and appellate courts should have dismissed the action
for this reason alone. An action must be prosecuted in the name of the real party-in-interest. 12
[T]he question as to "real party-in-interest" is whether he is "the party who would be benefitted or injured by the
judgment, or the party entitled to the avails of the suit."
xxx
In actions for the annulment of contracts, such as this action, the real parties are those who are parties to the
agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the
contracting parties and can show the detriment which would positively result to them from the contract even though
they did not intervene in it (Ibaez v. Hongkong & Shanghai Bank, 22 Phil. 572 [1912]) xxx.
These are parties with "a present substantial interest, as distinguished from a mere expectancy or future, contingent,
subordinate, or consequential interest. The phrase present substantial interest more concretely is meant such

interest of a party in the subject matter of the action as will entitle him, under the substantive law, to recover if the
evidence is sufficient, or that he has the legal title to demand and the defendant will be protected in a payment to or
recovery by him."13
Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. As the appellate court
stated, petitioners right to their parents properties is merely inchoate and vests only upon their parents death. While
still living, the parents of petitioners are free to dispose of their properties. In their overzealousness to safeguard their
future legitime, petitioners forget that theoretically, the sale of the lots to their siblings does not affect the value of
their parents estate. While the sale of the lots reduced the estate, cash of equivalent value replaced the lots taken
from the estate.
Whether the Deeds of Sale are void for lack of consideration
Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their
respondent father. Thus, petitioners ask the court to declare the Deeds of Sale void.
A contract of sale is not a real contract, but a consensual contract. As a consensual contract, a contract of sale
becomes a binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the minds of
the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that
manner of payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to
reformation. If there is no meeting of the minds of the parties as to the price, because the price stipulated in the
contract is simulated, then the contract is void. 14 Article 1471 of the Civil Code states that if the price in a contract of
sale is simulated, the sale is void.
It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing
to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay
the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid
contract.15
Petitioners failed to show that the prices in the Deeds of Sale were absolutely simulated. To prove simulation,
petitioners presented Emma Joaquin Valdozs testimony stating that their father, respondent Leonardo Joaquin, told her
that he would transfer a lot to her through a deed of sale without need for her payment of the purchase price. 16 The
trial court did not find the allegation of absolute simulation of price credible. Petitioners failure to prove absolute
simulation of price is magnified by their lack of knowledge of their respondent siblings financial capacity to buy the
questioned lots.17 On the other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the
cost of each lot sold. Not only did respondents minds meet as to the purchase price, but the real price was also stated
in the Deeds of Sale. As of the filing of the complaint, respondent siblings have also fully paid the price to their
respondent father.18
Whether the Deeds of Sale are void for gross inadequacy of price
Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of
Sale.
Articles 1355 of the Civil Code states:
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there
has been fraud, mistake or undue influence. (Emphasis supplied)
Article 1470 of the Civil Code further provides:
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent,
or that the parties really intended a donation or some other act or contract. (Emphasis supplied)
Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code which would
invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value
of the subject matter of sale. All the respondents believed that they received the commutative value of what they
gave. As we stated in Vales v. Villa:19
Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise
investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute
themselves guardians of persons who are not legally incompetent. Courts operate not because one person has been
defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things,
make ridiculous contracts, use miserable judgment, and lose money by them indeed, all they have in the world; but
not for that alone can the law intervene and restore. There must be, in addition, a violation of the law, the commission
of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy
it. (Emphasis in the original)
Moreover, the factual findings of the appellate court are conclusive on the parties and carry greater weight when they
coincide with the factual findings of the trial court. This Court will not weigh the evidence all over again unless there
has been a showing that the findings of the lower court are totally devoid of support or are clearly erroneous so as to
constitute serious abuse of discretion. 20 In the instant case, the trial court found that the lots were sold for a valid
consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of
Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon
us.

WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.

SO ORDERED.